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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.
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.
2.
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.
3.
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.
4.
If you transfer money from mutual fund A into mutual fund B, you may be charged a(n) _______ fee.
Choose wisely. There is only one correct answer.
12b-1
Exchange
Accounting
Exchange. Exchange fees cover the movement of money between funds.
5.
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.
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DONE