Question

A mutual fund investor sold his holdings at a net asset value per share (NAVPS) of $11.00. Calculate the selling/redemption price per share if the investor is charged a redemption fee of 2% based on the NAVPS at the time of redemption.

Answer 1

To calculate the selling/redemption price per share for an investor considering a 2% redemption fee, subtract the fee from the NAVPS. At an NAVPS of $11.00, the fee is $0.22, so the selling price becomes $10.78 per share.

Step-by-step explanation:

If a mutual fund investor sold his holdings at a net asset value per share (NAVPS) of $11.00 and is charged a redemption fee of 2% based on the NAVPS at the time of redemption, we can calculate the selling/redemption price per share as follows:

The redemption fee is 2% of $11.00, which is $0.22 per share ($11.00 * 2/100).
So, the selling/redemption price per share would be the NAVPS minus the redemption fee, which calculates to $10.78 per share ($11.00 - $0.22).