You are considering investing in a no-load mutual fund with an annual expense ratio of 0.6% and an annual 12b-1 fee of 0.75%. You could also invest in a bank CD paying 7.0% per year. What minimum annual rate of return must the fund earn to make you better off in the fund than in the CD

8.35%

Explanation:

In order to find out minimum annual rate of return we need to add annual expense ratio and 12b-1 fee in Bank CD per year

WORKINGS

Minimum annual rate = 7% + 0.6% + 0.75%

Minimum annual rate = 8.35%

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