Question

What is the purchase price of a front-end load fund if the Net Asset Value Per Unit (NAVPU) equals $20 and the sales charges is 2%?

Answer 1

The purchase price of a front-end load fund with a NAVPU of $20 and a 2% sales charge is $20.40 per unit. To find this, calculate 2% of the NAVPU (which is $0.40) and add it to the NAVPU.

Step-by-step explanation:

To calculate the purchase price of a front-end load mutual fund, you start with the Net Asset Value Per Unit (NAVPU) and add on the sales charge. In this case, the NAVPU is $20. The sales charge is 2%, which means you'll need to calculate 2% of the NAVPU to find out the additional cost due to the sales charge. To do this, you multiply the NAVPU by the sales charge percentage:

2% of $20 = 0.02 × $20 = $0.40

Now, you add the sales charge to the NAVPU to get the total purchase price per unit:

Purchase Price = NAVPU + Sales Charge

Purchase Price = $20 + $0.40 = $20.40

Therefore, the purchase price of the front-end load fund, including the sales charge, is $20.40 per unit.