ADMS 4501 Lecture Notes - Lecture 9: Defined Contribution Plan, Estate Planning, Correlation And Dependence
29 Apr 2017
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The unit investment trust should have lower operating expenses. Because its portfolio is fixed once the trust is established, it does not have to pay portfolio managers to constantly monitor and rebalance the portfolio as perceived needs or opportunities change. Because its portfolio is fixed, the unit investment trust also incurs virtually no trading costs. The offering price includes a 6 percent front-end load, or sales commission, meaning that every dollar paid results in only $. 94 going toward purchase of shares. Nav = offering price (1 load) = . 30 . 95 = . 69. Value of stocks sold and replaced = ,000,000. The fund sells at an 8. 6 percent discount from nav. Start of year price, p0 = . 00 1. 02 = . 24. End of year price, p1 = . 10 0. 93 = . 25. Although nav increased by $. 10, the price of the fund fell by sh. 99.
