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Funds 105: How to Purchase a Mutual Fund

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1.
A justification that some do-it-yourself mutual fund investors use for buying no-load funds is that _______.
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Since they are not getting investment advice in return, why pay a commission? For this reason, many prefer no-load funds.
2.
When you buy a load fund through an advisor, where does the load that you pay go?
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To your advisor. Loads are commissions that are paid to advisors. Fund managers receive a portion of the fund's management fee.
3.
With no-transaction fee networks, a mutual fund investor pays for the service _______.
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Indirectly. Since these networks charge mutual funds to participate in them, the funds pass their cost along to investors through the expense ratio.
4.
If you use an advisor to buy mutual fund shares for you, he or she will be paid a commission by investing your money in _______.
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Load funds. Load funds come with a sales charge that compensates the advisor for his or her work.
5.
Which of the following is not a way financial advisors are compensated?
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A part of the fund manager's fee. Advisors can charge you a fee or get a commission from products, such as mutual funds, that they sell. They can also charge a combination of fees and commissions. They cannot, however, take a portion of the fund manager's fee.