SIE practice questioneasyMutual Funds — 12b-1 Fees
12b-1 fees are charges that a mutual fund uses to cover:
- AMarketing, distribution, and advertising expenses✓ Correct answer
- BCustodial and accounting fees
- CFederal and state regulatory filing fees
- DPortfolio management and research expenses
Explanation
Why A — Marketing, distribution, and advertising expenses
12b-1 fees (named after SEC Rule 12b-1) are charged against fund assets to cover marketing, distribution, and advertising costs, including compensation to brokers who sell the fund. FINRA limits 12b-1 fees to 0.75% annually for distribution plus 0.25% for service fees (1.00% total). Funds charging 12b-1 fees above 0.25% cannot call themselves 'no-load.'
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