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Funds 105: How to Purchase a Mutual Fund

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1.
Which of the following is not a way financial advisors are compensated?
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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.
2.
Buying mutual funds from a single, large fund family will always provide you a diverse range of offerings to choose from.
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False. Some families, despite being large, specialize in a narrow range of funds.
3.
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 _______.
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Load funds. Load funds come with a sales charge that compensates the advisor for his or her work.
4.
No-transaction fee networks charge _______.
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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.
5.
A justification that some do-it-yourself mutual fund investors use for buying no-load funds is that _______.
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Since they are not getting investment advice in return, why pay a commission? For this reason, many prefer no-load funds.