Series 7 practice questioneasyPackaged Products — Mutual Funds
An investor who signs a letter of intent (LOI) for mutual fund purchases has how long to fulfill the commitment?
- A6 months
- B24 months
- C18 months
- D13 months✓ Correct answer
Explanation
Why D — 13 months
A letter of intent allows an investor to receive breakpoint discounts based on a commitment to invest a specified amount over a 13-month period. The LOI can be backdated up to 90 days to include prior purchases. If the investor does not fulfill the LOI, the fund will retroactively charge the higher sales load.
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