An investor invests $10,000 in a mutual fund that has a 6% front-end load

Finance Dec 23, 2020

An investor invests $10,000 in a mutual fund that has a 6% front-end load. The NAV of the mutual fund is $20. How many shares of the mutual fund does the investor receive?

Expert Solution

Nav of the mutual fund = $20

Front end load = 6%

Cost of 1 share of mutual fund = $20 + 6% of $20 = $21.2

Money invested by investor = $10,000

No. of shares of mutual fund received = Money invested / Cost of 1 share of mutual fund

No. of shares of mutual fund received = $10,000 / $21.2 = 471.70

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