Question

a mutual funds net asset value increases by $5 per share. an investor who owns 450 shares of this fund sells them all for a profit of $2,205. what can you conclude about the fund?
a. the fund is a no - load fund.
b. the fund had a $0.10 per share commission when purchased.
c. the fund had a $1.00 per share commission when purchased.
d. the fund had a $10.00 per share commission when purchased.

Explanation:

Step1: Calculate expected profit without commission

If there was no commission, the profit per share is $5, and for 450 shares, the profit would be $5 * 450 = $2250.

Step2: Find the difference in profit

The actual profit is $2205, so the difference is $2250 - $2205 = $45.

Step3: Calculate commission per share

This difference is the total commission paid. To find the commission per share, divide the total commission by the number of shares: $45 / 450 = $0.10 per share.

Answer:

b. The fund had a $0.10 per share commission when purchased.