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Funds 107: Mutual Fund Expenses

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1.
A mutual fund may legally charge 12b-1 fees up to 1.25 percent of a mutual fund's assets.
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False. The legal limit is 1 percent per year.
2.
One reason to choose a low-cost bond fund over a higher-cost bond fund is that bond fund returns don't differ very much anyway, so you may as well save on expenses.
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True. Bond fund returns don't vary all that much. Many investors find that every dollar going to expenses will hurt their return noticeably.
3.
What is the name of the expense that compensates those who administer a mutual fund?
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Management fee. This fee pays for those who run funds.
4.
Sales charges cover the ________ of mutual fund shares.
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Buying and selling. Sales charges are levied for both buying and selling shares.
5.
Redemption fees cover the _______ of mutual fund shares.
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Selling. Redemption fees are charged when you sell, or redeem, shares back to a fund.