Compute the offering price for a mutual fund with NAV of $1,200,000,000, an 8% front-end load, and 1,000,000 shares outstanding.

By Peter Cherewyk AAA
A:

A. $1,304.35

B. $1,200.00

C. $1,196.35

D. $1,296.00






Correct answer: A

"B" is the bid price, not the offering price; "C" is another guess; "D" is the figure arrived at by adding 8% to the offering price instead of dividing it by one-minus-8%.



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