Question

A mutual fund’s net asset value increases by $5 per share. An investor who owns 450 shares of this fund sells them all for a profit of $2,205. What can you conclude about the fund?
a.
The fund is a no-load fund.
b.
The fund had a $0.10 per share commission when purchased.
c.
The fund had a $1.00 per share commission when purchased.
d.
The fund had a $10.00 per share commission when purchased.

Answer 1

450 shares × $5 gain = $2,250 expected gain. Actual gain = $2,205, so short by $45.
$45 ÷ 450 shares = $0.10 per share commission at purchase.

Answer: b.