Name ____________________________

Chapter 16 Problems for Students

1. Given the following information, calculate the net asset value for the Boston Equity mutual fund. (LO 16.1)   

Total assets
$966 million
Total liabilities
$6 million
Total number of shares
38 million

(966000000-6000000)/38000000 = 25.26 per share
 

2. Given the following information, calculate the net asset value for the New Empire small-cap mutual fund. (LO 16.1)

Total assets
$760 million
Total liabilities
$30 million
Total number of shares
50 million

(760000000-30000000)/50000000=14.6 per share
 

3. Julie Martin is investing $48,000 in the Invesco Charter mutual fund. The fund charges a 5.50 percent commission when shares are purchased. Calculate the amount of commission Julie must pay. (LO 16.1)
48000*5.5%=2640
 

4. Bill Matthews invested $9,500 in the Washington Mutual fund. The fund charges a 5.75 percent commission when shares are purchased. Calculate the amount of commission Bill must pay. (LO 16.1)

 9500*5.75%=546.25

5. Ted Paulson needed money to pay for unexpected medical bills. To obtain $12,000, he decided to sell some of his shares in the Ridgemoor Capital Appreciation Fund. When he called the investment company, he was told that the following fees would be charged to sell his “B” shares: (LO 16.1)

First year
5 percent withdrawal fee
Second year
4 percent withdrawal fee
Third year
3 percent withdrawal fee
Fourth year
2 percent withdrawal fee
Fifth year
1 percent withdrawal fee


If he has owned the fund for 21 months and withdraws $12,000 to pay medical bills, what is the amount of the contingent deferred sales load?

 12000*0.04=480

6. Nina Collins purchased the New Dimensions bond fund. While this fund doesn’t charge a front-end load, it does charge a contingent deferred sales load of 4 percent for any withdrawals in the first five years. If Nina withdraws $6,200 during the second year, how much is the contingent deferred sales load? (LO 16.1)

 6200*4%=248

7. Mathew Johnston invested a total of $52,000 in the New Colony Pacific Region mutual fund. The management fee for this particular fund is 0.80 percent of the total asset value. Calculate the management fee Mathew must pay this year. (LO 16.1)
52000*0.8%=416
 

8. Jane Ramirez owns shares in the Touchstone Small Cap fund that have a current value of $19,250. The fund charges an annual 12b-1 fee of 0.25 percent. What is the amount of the 12b-1 fee Ms. Ramirez must pay? (LO 16.1)
19250*0.25%=48.13
 

9. In the prospectus for the Brazos Aggressive Growth fund, the fee table indicates that the fund has a 12b-1 fee of 0.35 percent and an expense ratio of 1.55 percent that is collected once a year on December 1. Joan and Don Norwood have shares valued at $63,000 on December 1. (LO 16.1)

What is the amount of the 12b-1 fee this year?
 63000*0.35%=220.5

What is the amount they will pay for expenses this year?
 63000*1.55%=976.5
10. Assume that one year ago you bought 100 shares of a mutual fund for $13.50 per share, you received a $0.42 per-share capital gain distribution during the past 12 months, and the market value of the fund is now $17. Calculate the total return for this investment if you were to sell it now. Dollar amount of total return = Capital gain distributions + Change in market value  (LO 16.4)
17-13.5=(3.5+0.42)*100=392
 

11. Given the information in question 10, calculate the percentage of total return for your $1,350 investment. Percent of total return = Dollar amount of total return / Original costs of your investment
(LO 16.4)
392/1350=0.29
 

12. Assume that one year ago, you bought 210 shares of a mutual fund for $24 per share and that you received an income dividend of $0.21 cents per share and a capital gain distribution of $0.43 cents per share during the past 12 months. Also assume the market value of the fund is now $26.50 a share. Calculate the total return for this investment if you were to sell it now. Dollar amount of total return = Capital gain distributions + Change in market value  (LO 16.4)

 26.5-24=(2.5+.43)*210=615.3
13. Given the information in question 12, calculate the percent of total return for your $5,040 investment. Percent of total return = Dollar amount of total return / Original cost of your investment
(LO 16.4)

 

14. Over a four-year period, Matt Ewing purchased shares in the Oakmark I Fund. Using the following information, answer the questions below. You may want to review the concept of dollar cost averaging in Chapter 14 before completing this problem. (LO 16.4)

Year
Investment Amount
Price per Share
2016
$3,000
$40 per share
2017
$3,000
$45 per share
2018
$3,000
$42 per share
2019
$3,000
$50 per share


At the end of four years, what is the total amount invested?
 

At the end of four years, what is the total number of mutual fund shares purchased? 


At the end of four years, what is the average cost for each mutual fund share?
 

15. Since Toni Brookfield retired, she has used income from her investment in the Alger Mid Cap growth fund to supplement her other retirement income. During one three-month period, the fund grew by $1,700. If she withdraws 65 percent of the growth, how much will she receive? (LO 16.4)