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Funds 107: Mutual Fund Expenses

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1.
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.
2.
If a mutual fund does not charge a sales load, it may compensate its brokers through 12b-1 fees.
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True. Some people call 12b-1 fees hidden loads because they compensate brokers in this way.
3.
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.
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True. Bond fund returns don't vary all that much. Many investors find that every dollar going to expenses will hurt their return noticeably.
4.
Sales charges cover the ________ of mutual fund shares.
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Buying and selling. Sales charges are levied for both buying and selling shares.
5.
If you transfer money from mutual fund A into mutual fund B, you may be charged a(n) _______ fee.
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Exchange. Exchange fees cover the movement of money between funds.