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Funds 107: Mutual Fund Expenses

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1.
Which of the following is not another name for a redemption fee?
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Front-end load. Front-end loads are charged when you buy shares, not when you redeem them.
2.
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.
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.
Front-end sales loads apply when you _______ mutual fund shares.
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Buy. Front-end loads, or sales charges, are charged when you buy mutual fund shares.
5.
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.
Choose wisely. There is only one correct answer.
True. Bond fund returns don't vary all that much. Many investors find that every dollar going to expenses will hurt their return noticeably.