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Funds Beginner:
Mutual Fund Expenses
Test your knowledge
Choose wisely. There is only one correct answer to each question.
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1.
Sales charges cover the ________ of mutual fund shares.
Choose wisely. There is only one correct answer.
Buying and selling
Maintenance
Marketing costs
Buying and selling. Sales charges are levied for both buying and selling shares.
2.
Which of the following is not a cost covered by a mutual fund's 12b-1 fees?
Choose wisely. There is only one correct answer.
Advertising costs
Toll-free telephone numbers
Management expenses
The distribution of sales material
Management expenses. These are not covered by 12b-1 fees, but by their own fees.
3.
Why might you as an investor favor low-cost funds?
Choose wisely. There is only one correct answer.
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.
4.
What is the name of the expense that compensates those who administer a mutual fund?
Choose wisely. There is only one correct answer.
Exchange fee
Sales charge
Management fee
Sales load on reinvested dividends
Management fee. This fee pays for those who run funds.
5.
Redemption fees cover the _______ of mutual fund shares.
Choose wisely. There is only one correct answer.
Buying
Maintaining
Selling
Selling. Redemption fees are charged when you sell, or redeem, shares back to a fund.
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DONE