Fund Management Fee Question question, obtained, Investment, 1000

spartan1

Investment Amount 1000, with 12% annual return
Sales Charge 1.5%
Sales Charge on redemption: .75% during first 4 years
Total Fee: 2.2%

39. The return by Class B shares over 3 year period is closest to ?
A.28.48%
B. 8.71%
C. 6.19%

I got 1284.81 and I divided by 1000 and got A 28.48% cause to me the problem is asking for total return over the 3 year period? but the answer is B which is obtained by taking ^1/3 of 28.48% Is it me or does the question sounds really ambiguous?

This is from the Elan 2000 qbank

kmf229

It should state annual return I guess.

Ionutzakis

can you show the calculations please?

draz

I think it should be:

year 1 return: 1.12 x 0.985x 0.978
year 2 return: 1.12 x 0.978
year 3 return: 1.12 x 0.978 x 0.9925

Geometric return over 3 years:
(year1 return x year 2 return x year 3 return) ^ (1/3) -1 = answer B

Thanks for posting the question! :-)