Could you please clarify the nature of expenses to be included at each level? e.g. Offer basis, offer price - CMP section 4.2 says appropriation price is market offer price of assets + expenses incurred in the purchase + stamp/other duty - CMP section 6.2 says offer price is appropriation price + initial charges + rounding, where initial charges include "other management expenses" Just to be clear in the case of a finicky question, is the former relating to specific transaction/dealing costs of the assets' purchase and the latter e.g. contribution to salaries/overheads/etc.? One might argue that any direct costs relating to dealing with the customer should be passed on regardless of if units are being bought or sold and therefore variable costs and/or contribution to overheads should be included in the appropriation price...
Yes, in Section 4.2 the appropriation price is allowing for the specific costs of buying assets. The company also needs to charge for all the other costs that you mentioned, eg rent, commission, admin etc. These costs could be charged for in a number of ways, eg fund management charge, reduced allocation rate or bid/offer spread. Section 6.2 is referring to the possibility of using an initial charge (which is another name for the bid/offer spread) whereby the company charges the policyholder more to buy a unit (the offer price) than to sell the unit (bid price). Many companies would not have a bid/offer spread and instead make use of one or more of the other charges. I hope this helps. Mark
