Series 7 practice questioneasyPackaged Products — Mutual Funds
Class B mutual fund shares are characterized by which of the following?
- AA front-end sales load and low 12b-1 fees
- BA level load with no conversion feature
- CNo sales charges of any kind
- DA contingent deferred sales charge (CDSC) that declines over time✓ Correct answer
Explanation
Why D — A contingent deferred sales charge (CDSC) that declines over time
Class B shares do not charge a front-end load but instead impose a contingent deferred sales charge (CDSC) or back-end load if shares are redeemed within a certain period. The CDSC typically declines over time (e.g., from 5% in year one to 0% after six years), and Class B shares usually convert to Class A shares after the CDSC period expires.
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