Funds Beginner: Mutual Fund Expenses

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1.
Front-end sales loads apply when you _______ mutual fund shares.
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Buy. Front-end loads, or sales charges, are charged when you buy mutual fund shares.
2.
Which of the following is not a cost covered by a mutual fund's 12b-1 fees?
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Management expenses. These are not covered by 12b-1 fees, but by their own fees.
3.
Why might you as an investor favor low-cost funds?
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Both of the above. Because the less the fund charges, the more you get to keep, and the better your returns tend to be.
4.
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.
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True. Contingent deferred sales charges drop a little each year.
5.
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.