Problem: Personal Finance Mutual Funds
The following information pertains to the Big Returns Fund:
Cost Class A Class B Class C
Front-end load 5.50 0.00 0.00
Back-end load 0.00 5.00 1.00
Declining 1% per year First year only
Management fee 0.90 0.90 0.90
12b-1 fee 0.25 0.50 1.00
For each share class, calculate (i) how much you would pay in initial commissions, (ii) how much you would pay in back-end commissions if you sold after 2 years, and (iii) how much you would pay in annual expenses over a 2-year holding period. Assume that you purchased
$2,500 worth of shares in this fund and that prior to reductions for management and 12b-1 fees the gross fund return was 10 percent each year.
The response should include a reference list. Using one-inch margins, Times New Roman 12 pnt font, double-space and APA style of writing and citations.