Test your knowledge

Choose wisely. There is only one correct answer to each question.

Keep studying!

Review your answers below to learn more.

Why might you as an investor favor low-cost funds?

Choose wisely. There is only one correct answer.

Because the less money you pay in expenses, the more money that goes to you

Because low-cost funds tend to perform better than high-cost funds

Both of the above

None of the above

Both of the above. Because the less the fund charges, the more you get to keep, and the better your returns tend to be.

If a mutual fund does not charge a sales load, it may compensate its brokers through 12b-1 fees.

Choose wisely. There is only one correct answer.

True

False

True. Some people call 12b-1 fees hidden loads because they compensate brokers in this way.

What is the name of the expense that compensates those who administer a mutual fund?

Choose wisely. There is only one correct answer.

Exchange fee

Sales charge

Management fee

Sales load on reinvested dividends

Management fee. This fee pays for those who run funds.

Which of the following is not another name for a redemption fee?

Choose wisely. There is only one correct answer.

Exit fee

Deferred sales load

Front-end load

Back-end load

Front-end load. Front-end loads are charged when you buy shares, not when you redeem them.

Sales charges cover the ________ of mutual fund shares.

Choose wisely. There is only one correct answer.

Buying and selling

Maintenance

Marketing costs

Buying and selling. Sales charges are levied for both buying and selling shares.

© Copyright 2024 Morningstar, Inc. All rights reserved. Morningstar, the Morningstar logo, Morningstar.com, Morningstar Tools are either trademark or service marks of Morningstar, Inc. In addition, we encourage you to read this important disclosure.