IFIC Mutual Funds Licensing Practice Exam · Question
Sarah invests $10,000 in a Series A mutual fund with an MER of 2.10% and a front-end load of 2%. If the fund's NAV per unit is $10.00, how many units will Sarah initially purchase?
Sarah's initial investment is $10,000. With a 2% front-end load, the amount invested is $10,000 * (1 - 0.02) = $9,800. The number of units purchased is $9,800 /
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Question: Sarah invests $10,000 in a Series A mutual fund with an MER of 2.10% and a front-end load of 2%. If the fund's NAV per unit is $10.00, how many units will Sarah initially purchase?
Answer options: ✅ 980 units
- 1,000 units
- 998 units
- 978 units
Correct answer: 980 units
Explanation: Sarah's initial investment is $10,000. With a 2% front-end load, the amount invested is $10,000 * (1 - 0.02) = $9,800. The number of units purchased is $9,800 / $10.00 NAV per unit = 980 units. The MER is a recurring cost, not an initial transaction cost.
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