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Exam Code: 0.5 - 1 = 13.52% per year, annually compounded. Hence, for a 2 year horizon, you should select Alpha, since Beta has an annual rate of 13%.


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Alpha is a 9% load-fund, which you expect to have an annual rate of return of about 19% over the next 2 years. Beta is a no-load fund, which is expected to have a rate of return of around 13%. If your investment horizon is 2 years, which fund should you invest in and what is your expected net rate of return per year?
A. Alpha; 17.3%
B. Alpha; 13.5%
C. none of these answers
D. Beta; 13.0%
Answer: B
Explanation:
Explanation/Reference:
Explanation:
With fund Alpha, a deposit of $100 will give you shares worth $91 after the load charge is taken into account. This amount is expected to grow to 91*(1+0.19)

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