## The Bruin Stock Fund sells Class A shares that have a front-end load of 4.8 percent, a 12b-1 fee of 0.42 percent, and other fees of 1.3 perc

Question

The Bruin Stock Fund sells Class A shares that have a front-end load of 4.8 percent, a 12b-1 fee of 0.42 percent, and other fees of 1.3 percent. There are also Class B shares with a 5 percent CDSC that declines 1 percent per year, a 12b-1 fee of 1.95 percent, and other fees of 1.3 percent. Assume the portfolio return is 11 percent per year. What is the value of \$1 invested in each share class if your investment horizon is 3 years? Class A \$ Class B \$ What if your investment horizon is 20 years?

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1 month 2021-10-22T05:20:55+00:00 2 Answers 0 views 0

## Answers ( )

1. Answer:

Step-by-step explanation:

Investment Amount Net of Front end Load (1 – 0.048) = \$0.952

The value of \$1 invested in each share class if investment horizon is 3 years

• After 3 years: (For every dollar invested)
• Class A: 0.952 x (1+0.11-0.0042-0.013)^3 = \$1.24
• Class B: (1 x (1+0.11-0.0195-0.013)^3) x (1-0.02) = \$1.23

SIMILARLY,

The value of \$1 invested in each share class if investment horizon is 20 years

• After 20 years: (For every dollar invested)
• Class A: 0.952 x (1+0.11-0.0042-0.013)^20 = \$5.62
• Class B: 1 x (1+0.11-0.0195-0.013)^20 = \$4.45
2. Answer:

Part 1 :

The total investment for,

Class A =  \$1.24

Class B = \$ 1.23

Part 2:

The total investment for,

Class A = \$ 5.62

Class B = \$ 4.45

Step-by-step explanation:

The amount of investment Net of Front end Load,

Part 1:

If the investment horizon is 3 years, the value of \$1 invested in each share class for Class A become,

The value of \$1 invested in each share class for Class A is \$1.24.

If the investment horizon is 3 years, the value of \$1 invested in each share class for Class B become,

The value of \$1 invested in each share class for Class B is \$1.23.

Part 2:

If the investment horizon is 20 years, the value of \$1 invested in each share class for Class A become,

The value of \$1 invested in each share class for Class A is \$5.62.

If the investment horizon is 20 years, the value of \$1 invested in each share class for Class B become,

The value of \$1 invested in each share class for Class B is \$4.45.