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Funds Beginner: Mutual Fund Sales Loads

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1.
Why do a mutual fund's contingent deferred sales charges decline slowly over time?
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To encourage investors to keep their money in the fund as long as possible. A slow decline can encourage investors to keep their money in for many years.
2.
Which of the following names is most likely to refer to a front-end load?
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Sales charge on purchases. This is the only choice named that refers to buying shares.
3.
What is the maximum allowable sales load?
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8.5 percent. By law, a sales load may not exceed 8.5 percent of the amount invested.
4.
If you invest $1,000 into a mutual fund that has a 7 percent front-end load, how much money will actually be invested in the fund?
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$930. Seven percent of $1,000 is $70, which is subtracted from the $1,000 to leave you with $930.
5.
Which of the following do you not get from a broker in return for paying a sales fee?
Choose wisely. There is only one correct answer.
Loans of money to buy shares. Brokers are not allowed to give loans to buy mutual fund shares.
Introduction to Mutual Fund Sales Loads What Is a Mutual Fund Sales Load? Mutual Fund Front-End Loads Mutual Fund Back-End Loads What Should Investors Expect from Load Mutual Funds? Summary of Mutual Fund Sales Loads Find out what you learned