The NAV of an open-ended fund is $6.35. The fund charges a 9% sales charge and no redemption charges. The price at which you can purchase a share of the fund equals ________.
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A. B. C. D.B
The offer price i.e. the price at which you can buy a share equals NAV/(1-load charge) = 6.35/(1-0.09) = $6.98
Be careful NOT to calculate the offer price as NAV*(1 + load charge). The sales charge is expressed as an percentage of the amount you deposit. In this example, you deposit $6.98 and get a share worth $6.35 = $6.98*(1-0.09)