Choose wisely. There is only one correct answer to each question.
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1.
No-transaction fee networks charge _______.
Fund companies for being part of the network. There are no up-front costs with a no-transaction fee network. The networks charge funds for being included, and funds very often pass along these charges to all shareholders (whether or not they invest via a supermarket) in their expense ratios.
2.
Investing with one of the more diverse fund families or a fund supermarket _______.
Limits your paperwork. Investing all in one place makes recordkeeping easier and makes moving to and from funds a snap, too. And as long as you stick with one of the largest fund families, you'll have plenty of diversification options, too.
3.
Which of the following is not a way financial advisors are compensated?
A part of the fund manager's fee. Advisors can charge you a fee or get a commission from products, such as mutual funds, that they sell. They can also charge a combination of fees and commissions. They cannot, however, take a portion of the fund manager's fee.
4.
Buying mutual funds from a single, large fund family will always provide you a diverse range of offerings to choose from.
False. Some families, despite being large, specialize in a narrow range of funds.
5.
If you use an advisor to buy mutual fund shares for you, he or she will be paid a commission by investing your money in _______.
Load funds. Load funds come with a sales charge that compensates the advisor for his or her work.
