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1.
Sales charges cover the ________ of mutual fund shares.
Buying and selling. Sales charges are levied for both buying and selling shares.
2.
What is the name of the expense that compensates those who administer a mutual fund?
Management fee. This fee pays for those who run funds.
3.
A redemption fee that falls from 4 percent one year to 3 percent the next year and 2 percent the year after that is a contingent deferred sales charge.
True. Contingent deferred sales charges drop a little each year.
4.
A mutual fund may legally charge 12b-1 fees up to 1.25 percent of a mutual fund's assets.
False. The legal limit is 1 percent per year.
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.
True. Bond fund returns don't vary all that much. Many investors find that every dollar going to expenses will hurt their return noticeably.