Question

A sector fund specializing in commercial bank stocks had average daily assets of $3.8 billion during the year. Suppose the annual operating expense ratio for the mutual fund is 0.85 percent, and the management fee is 0.45 percent. How much money did the fund's management earn during the year? If the fund doesn't charge any 12b-1 fees, how much were miscellaneous and administrative expenses during the year? (Do not round intermediate calculations. Enter your answer in dollars not in millions, e.g., 1,234,567.) Management fee Miscellaneous and administrative expenses

Answer 1

Management fees = Average daily assets*Management fee percentage

= 3800,000,000*0.45%

= 17,100,000

Miscellaneous and admisnistrative expenses = Average daily assets*(Operating expense ratio -Management fee percentage)

= 3800,000,000*(0.85%-0.45%)

= 15,200,000