A client decides to buy a mutual fund with a NAVPS of $15.00 and a 3% sales charge. What is the front-end load as a percentage of the net amount invested?
A front-end sales charge is normally quoted as a percentage of the total purchase price, whereas the question asks for the charge as a percentage of the net amount actually invested . If the sales charge is 3%, then 97% of the client ' s total payment is invested. Therefore, the equivalent load relative to the net investment is calculated as 3% ÷ 97% = 3.09278%, which rounds to 3.093% . Using the $15.00 NAVPS gives the same result: the offering price is approximately $15 ÷ 0.97 = $15.4639, so the sales charge is approximately $0.4639 per unit. Dividing $0.4639 by the $15.00 net amount invested gives approximately 3.093%. Therefore, Option B is correct.
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