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PilotLPTM [1.2K]
2 years ago
7

Alima has invested $50,000 in an S&P 500 index ETF that charges a total expense ratio of 8 basis points per year. How much w

ould she pay in dollars for management of her fund?
Business
1 answer:
katrin [286]2 years ago
7 0

Answer:

Alima will pay 40 dollars in management of her fund.

Explanation:

A basis point is equivalent of 1/100th of 1%  

an expense ratio of 8 baiss point will be equivalent to 0.08%

0.08/100 = 0.0008

The managenement will get this as expense ratio while invesotr will see their investment yield decreases for this amount.

On a yearly basis Alima will pay $50,000 x 0.0008 = 40 dollars

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