c) You buy 100 shares in a mutual fund at its net asset value of $10. The fund charges a load fee of 5.5 percent. During the year, the mutual fund…

c) You buy 100 shares in a mutual fund at its net asset value of $10. The fund charges a load fee of 5.5 percent. During the year, the mutual fund distributes $0.75 in dividends. You redeem the shares for their net asset value of $12.03, and the fund does not charge an exit fee. What percentage return do you earn on the investment?

d) You buy 100 shares in a no-load mutual fund at its net asset value of $10. During the year, the mutual fund distributes $0.75 in dividends. You redeem the shares for their net asset value of $12.03, but the fund charges a 5.5 percent exit fee. What percentage return do you earn on the investment?

e) You buy 100 shares in a no-load mutual fund at its net asset value of $10. During the year, the mutual fund distributes $0.75 in dividends. You redeem the shares for their net asset value of $12.03, and the fund does not charge an exit fee. What percentage return do you earn on the investment?

f) Compare your answers to parts (a) through (e). What are the implications of the comparisons? How would each of the following affect the percentage returns?

You buy and sell stocks through an online broker instead of a full-service broker. You are in the 25 percent federal income tax bracket. The distributions are classified as long-term instead of short-term. The purchases and sales occur in your retirement account (e.g., IRA).

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