When a mutual fund company charges a fee of 0.49% on its index funds
When a mutual fund company charges a fee of 0.49% on its index funds, its assets in the fund are $30 billion. When it charges a fee of 0.13%, its assets in the fund are $269 billion.
(a) Let x denote the fee that the company charges as a percentage of the index fund and let A(x) denote its assets in the fund. Express A(x) as a linear function of x.
(b) One company lowers its fees on various index funds from an average of 0.38% to 0.24%. Let R(x) denote the revenue of the company from fees when its index-fund fee is x%. Compare the revenue of the company before and after lowering the fees. [Hint: Revenue is x% of the assets.]
(c) Find the fee that maximizes the revenue of the company and determine the maximum revenue.
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When a mutual fund company charges a fee of 0.49% on its index funds
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b) What type of fee is charged: No-load, Front-end load or a
Back-end load?
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or open-end mutual fund?
d) Based on your response in c), explain...
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