FRM Part I · FRM Exam Part I · Fund Management
An investor buys Class A shares of a mutual fund with a 5% front-end load, investing $10,000 in total. The fund's NAV per share at purchase is $25.00 and the front-end load is deducted from the amount invested. How many shares does the investor receive?
The investor receives 380 shares. The 5% front-end load takes $500 from the $10,000, leaving $9,500 to be invested at the $25.00 NAV, which buys 380 shares.
- A400.0
- B380.0Correct
- C420.0
- D361.0
Explanation
Load of 5% on $10,000 is $500, leaving $9,500 invested at NAV. Shares = 9,500/25 = 380. Receiving 400 ignores the load.
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