Chapter 16 Homework

In the prospectus for the Brazos Small Cap Fund, the fee table indicates that the fund has a 12b-1 fee of 0.20 percent and an expense ratio of 1.45 percent that is collected once a year on December 1. Joan and Don Norwood have shares valued at $84,000 on December 1. (a). What is the amount of the 12b-1 fee this year? (Round your answer to 2 decimal places.) (b). What is the amount they will pay for expenses this year? (Round your answer to 2 decimal places.)

(a) 12b-1 fee = Investment value × 12b-1 fee percentage = $84,000 × 0.0020 = $168.00 (b) Expenses = Investment value × Expense charge percentage = $84,000 × 0.0145 = $1,218.00

Over a four-year period, Matt Ewing purchased shares in the Oakmark I Fund. Use the following information: Year Investment Amount Price per Share 2013 $ 4,300 $ 50 2014 4,300 35 2015 4,300 34 2016 4,300 46 (a) At the end of four years, what is the total amount invested? (b) At the end of four years, what is the total number of mutual fund shares purchased? (Round your intermediate calculations and answer to 4 decimal places.) (c) At the end of four years, what is the average cost for each mutual fund share? (Round your intermediate calculations to 4 decimal places and answer to 2 decimal places.)

(a) Total amount invested = Annual investment × Number of years = $4,300 × 4 = $17,200 (b) At the end of four years, Mr. Ewing owns $428.8060 shares, as illustrated below. Shares 2013 = $4,300 / $50 = 86.0000 2014 = $4,300 / $35 = 122.8571 2015 = $4,300 / $34 = 126.4706 2016 = $4,300 / $46 = 93.4783 428.8060 (c) Average cost = Total amount invested / Total shares = $17,200 / 428.8060 = $40.11 per share

You are given the following information: Total assets $ 760 million Total liabilities $ 5 million Total number of shares 20 million

Calculate the net asset value for the Boston Equity mutual fund. (Round your answer to 2 decimal places.) NAV = (Value of the fund's portfolio - Liabilities) / Number of shares outstanding = ($760 - 5) / 20 = $37.75 per share

Assume that one year ago you bought 140 shares of a mutual fund for $20 per share, you received a capital gain distribution of $0.65 per share during the past 12 months, and the market value of the fund is now $15. Calculate the total return for this investment if you were to sell it now. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) ANS: -609.00

Capital gain distributions = Distribution per share × Number of shares = $0.65 × 140 = $91 Change in market value = (Sales price - Purchase price) × Number of shares = ($15 - 20) × 140 = -$700 Total return = Capital gains distributions + Change in market value = 91 - $700 = -$609.00

Ted Paulson needed money to pay for unexpected medical bills. To obtain $9,500, he decided to sell some of his shares in the Ridgemoor Capital Appreciation Fund. When he called the investment company, he was told that the following fees would be charged to sell his B shares: First year 5 percent withdrawal fee Second year 4 percent withdrawal fee Third year 3 percent withdrawal fee Fourth year 2 percent withdrawal fee Fifth year 1 percent withdrawal fee If he has owned the fund for 13 months and withdraws $9,500 to pay medical bills, what is the amount of the contingent deferred sales load?

Contingent deferred sales load = Withdrawal amount × Contingent deferred sales load percentage = $9,500 × 0.04 = $380

Bill Matthews is investing $14,100 in the Washington Mutual fund. The fund charges a 4.40 percent commission when shares are purchased. Calculate the amount of commission Bill must pay. (Round your answer to 2 decimal places.)

Dollar amount of sales load = Original investment × Sales load percentage = $14,100 × 0.0440 = $620.40 Commission is another term that is used to refer to the sales load.

Jan Throng is investing $27,200 in the Invesco Charter mutual fund. The fund charges a 4.50 percent commission when shares are purchased. Calculate the amount of commission Jan must pay. (Round your answer to 2 decimal places.)

Dollar amount of sales load = Original investment × Sales load percentage = $27,200 × 0.045 = $1,224.00 Commission is another term that is used to refer to the sales load.

Assume that one year ago you bought 140 shares of a mutual fund for $20 per share, you received a capital gain distribution of $0.65 per share during the past 12 months, and the market value of the fund is now $15. Calculate the total return for this investment if you were to sell it now. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) ANS: -646.20

Income dividends = Income distribution per share × Number of shares = $0.16 × 180 = $28.80 Capital gain distributions = Distribution per share × Number of shares = $0.25 × 180 = $45.00 Change in market value = Sales price - Purchase price = (Sales price per share - Purchase price per share) × Number of shares = ($20 - 24) × 180 = -$720 Total return = Income dividends + Capital gains distributions + Change in market value = $28.80 + 45.00 - 720 = -$646.20

Assume that one year ago, you bought 210 shares of a mutual fund for $20 per share and that you received an income dividend of $0.22 cents per share and a capital gain distribution of $0.30 cents per share during the past 12 months. Also assume the market value of the fund is now $23 a share. Calculate the percentage of total return for your $4,200 investment. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) ANS: 17.60%

Income dividends = Income distribution per share × Number of shares = $0.22 × 210 = $46.20 Capital gain distributions = Distribution per share × Number of shares = $0.30 × 210 = $63.00 Change in market value = Sales price − Purchase price = (Sales price per share - Purchase price per share) × Number of shares = ($23 − 20) × 210 = $630 Total return = Income dividends + Capital gains distributions + Change in market value = $46.20 + 63.00 + 630 = $739.20 Percent of total return = Dollar amount of total return / Original cost of your investment = $739.20 / $4,200 = 0.1760, or 17.60%

Mike Jackson invested a total of $19,400 in the New Colony Pacific Region mutual fund. The management fee for this particular fund is 0.90 percent of the total asset value. Calculate the management fee Mike must pay this year. (Round your answer to 2 decimal places.)

Management fee = Investment value × Management fee percentage = $19,400 × 0.0090 = $174.60