Choose wisely. There is only one correct answer to each question.
0%
Keep studying!
Review your answers below to learn more.
1.
You may be assessed an exchange fee when you put your earned dividends back into your mutual fund.
False. You may be charged a sales load on reinvested dividends, but not an exchange fee.
2.
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.
3.
Sales charges cover the ________ of mutual fund shares.
Buying and selling. Sales charges are levied for both buying and selling shares.
4.
A 1.5% expense ratio is acceptable for which type of fund?
A foreign-stock fund. You should expect to pay less for fund types with a narrow range of returns, such as bond or large-cap stock funds. Look for funds with expense ratios of 1% or less. The range of returns is wider for small-cap or foreign funds, so you should expect to pay more.
5.
If a mutual fund does not charge a sales load, it may compensate its brokers through 12b-1 fees.
True. Some people call 12b-1 fees hidden loads because they compensate brokers in this way.