Costs · Question 12 of 12
An investor buys units worth 10,000 euros in a fund with a 5% front-end load on the unit value. Which statements are correct?
2 answers are correct. Hard
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Answer
- A About 9,524 euros is actually invested
- B The unit value must rise by 5% for there to be no loss
Explanation
The issue price is the unit value × 1.05. For 10,000 euros she receives units worth 10,000 / 1.05 ≈ 9,524 euros; the load is about 476 euros. For the redemption value to reach 10,000 euros again, the unit value must rise by 5%.