Question

Suzy is considering two mutual funds. Fund ABC is expected to earn 11%. Fund XYZ is expected to earn 12%. The expense ratio of ABC is 1.1% while the expense ratio for XYZ is 0.95%. Fund XYZ also has a 6% front-end load. Suzy has $5000 to invest. Which of the following is true?

		Fund ABC will earn 1.15% less than XYZ after five years.
		Fund ABC will earn 1% more than XYZ after five years.
		Fund ABC will earn 1% less than XYZ after five years.
		Fund ABC will earn 1.15% more than XYZ after five years

Answer 1

let us lmest $100 today in the tund; tota sipas [Coox .1) - L-147] X. - ...] x 0 = 1.2.] mov --17]* -- ABC = $159.439 42-[[[C100- 64.)x+12 - 0.15)) 12-0957) *2-0-95 %) *20:35. 2012-01:57 = 157. 86 ABC out performs by 1%

If $100 is invested today.
Fund ABC return after 5 years = $159.44
Fund XYZ return after 5 years = $157.86

Answer: Fund ABC will earn 1% more than XYZ after five years.