Question

An investor invests $100,000 in a mutual fund that has a 5 percent front-end load, charges a management fee of 0.5 percent, and a 12b-1 fee of 0.25 percent. The investor plans to leave the investment for one year. What is the dollar amount of the total shareholder cost? Group of answer choices $5,000. $5,500. $5,750. $750. $500.

Answer 1

$5,750

Step-by-step explanation:

To find the total shareholder cost we must add the front-end load, the management fee and the 12b-1 fees.

The front-end load = $100,000 x 5% = $5,000

The other two fees = $100,000 x (0.25% + 0.5%) = $100,000 x 0.75% = $750

total shareholder cost = $5,000 + $750 = $5,750