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Funds 107: Mutual Fund Expenses

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1.
A 1.5% expense ratio is acceptable for which type of fund?
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A foreign-stock fund. You should expect to pay less for fund types with a narrow range of returns, such as bond or large-cap stock funds. Look for funds with expense ratios of 1% or less. The range of returns is wider for small-cap or foreign funds, so you should expect to pay more.
2.
You may be assessed an exchange fee when you put your earned dividends back into your mutual fund.
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False. You may be charged a sales load on reinvested dividends, but not an exchange fee.
3.
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.
4.
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.
5.
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.