An individual investor approaches you and asks, "If I were to purchase a fund with a load of 6 percent, and I used $6,200 to purchase the fund, what dollar amount would the shares purchased be?"
Click on the arrows to vote for the correct answer
A. B. C. D.B
6,200 x .94 = 5,828
To calculate the dollar amount of shares purchased with a load, we need to take into account the load percentage and the initial investment amount.
In this case, the load is given as 6 percent, and the investor is using $6,200 to purchase the fund.
The load is essentially a sales charge or fee that is deducted from the initial investment before the shares are purchased. So, if the load is 6 percent, it means that 6 percent of the initial investment will be deducted as a sales charge.
To calculate the dollar amount of shares purchased, we need to subtract the load from the initial investment and then divide by the net asset value (NAV) per share.
Let's calculate it step by step:
Calculate the load amount: Load amount = Load percentage × Initial investment Load amount = 6% × $6,200 Load amount = 0.06 × $6,200 Load amount = $372
Calculate the net investment amount: Net investment amount = Initial investment - Load amount Net investment amount = $6,200 - $372 Net investment amount = $5,828
Therefore, the dollar amount of shares purchased would be $5,828.
So, the correct answer is B. $5,828.