Test your knowledge

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Keep studying!

Review your answers below to learn more.

Sales charges cover the ________ of mutual fund shares.

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Buying and selling

Maintenance

Marketing costs

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

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

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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.

You may be assessed an exchange fee when you put your earned dividends back into your mutual fund.

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True

False

False. You may be charged a sales load on reinvested dividends, but not an exchange fee.

A mutual fund may legally charge 12b-1 fees up to 1.25 percent of a mutual fund's assets.

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True

False

False. The legal limit is 1 percent per year.

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

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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.

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