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Funds Beginner: Mutual Fund Expenses

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1.
Sales charges cover the ________ of mutual fund shares.
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Buying and selling. Sales charges are levied for both buying and selling shares.
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.
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.
4.
Redemption fees cover the _______ of mutual fund shares.
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Selling. Redemption fees are charged when you sell, or redeem, shares back to a fund.
5.
One reason to choose a low-cost bond fund over a higher-cost bond fund is that bond fund returns don't differ very much anyway, so you may as well save on expenses.
Choose wisely. There is only one correct answer.
True. Bond fund returns don't vary all that much. Many investors find that every dollar going to expenses will hurt their return noticeably.