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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.
Which of the following is not another name for a redemption fee?
Choose wisely. There is only one correct answer.
Exit fee
Deferred sales load
Front-end load
Back-end load
Front-end load. Front-end loads are charged when you buy shares, not when you redeem them.
2.
You may be assessed an exchange fee when you put your earned dividends back into your mutual fund.
Choose wisely. There is only one correct answer.
True
False
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.
Choose wisely. There is only one correct answer.
Buy
Sell
Redeem
Buy. Front-end loads, or sales charges, are charged when you buy mutual fund shares.
4.
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.
5.
A mutual fund may legally charge 12b-1 fees up to 1.25 percent of a mutual fund's assets.
Choose wisely. There is only one correct answer.
True
False
False. The legal limit is 1 percent per year.
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DONE