FINE 441 Investment Management

Assignment questions - Answer all questions

Assess the trends and issues in the global and Mauritian fund management industry.

Spearman Domestic Equity Fund sells two types of share, B+ and B++. B+ shares are sold with front-end load fee of 6% whilst Type B++ shares are not subject to front-end load fee but are charged to investment management fee of 2% per annum as well as exit (back-end load) fee that start at 15% and reduce by 3% for each full year the investor holds the portfolio (until the 5th year). The annual rate of return for both types of share is 17%.

1. (a)  Calculate the value of a Rs 50,000 investment made by investor Mr Smith in Type B+ shares if the shares are disposed after (i) one year and (ii) 4 years. [ 8 Marks]
2. (b)  Calculate the value of a Rs 50,000 investment made by investor Mrs Willow in Type B++ shares if the shares are disposed after (i) one year and (ii) 4 years. [14 Marks]
3. (c)  As an analyst, which types of share will you recommend the investor to buy? [ 3 Marks]