NAV

CFA Level I
#1

An investor is contemplating buying a load fund versus a no load mutual fund. She is trying to figure out the actual amount she will have to spend on the load fund. The shares have a net asset value (NAV) of $34.50 and a load of 5.2 percent. Determine which type of fund will always have a share price equal to the NAV and the price she will pay for the load fund. Fund Offering Price A) closed-end $34.50 B) closed-end $36.39 C) open-end $36.39 D) open-end $34.50

#2

Anyone???

#3

C

#4

C Open ended fund. She will pay NAV/(1-load). 34.50/(1-.052)= 36.39

#5

Thanks Smeet and annasmom. Sorry can I ask you to explain why?

#6

this was posted before it is assumed that is a front load which would mean that only 94.8% of the money you use are actually used for buying the mutual fund and 5.2% go for sales commission. so answers is C The only problem is that it might be an end load fund so the money needed to purchase the fund could be the actual price that is 34.5. am i wrong in my previous statement?