SIE practice questioneasyLOI/ROA
A client signs a Letter of Intent (LOI) with a mutual fund family. What is the primary benefit of an LOI?
- AIt allows the investor to qualify for reduced sales charges upfront✓ Correct answer
- BIt grants immediate redemption privileges
- CIt eliminates 12b-1 fees
- DIt guarantees a fixed investment return
Explanation
Why A — It allows the investor to qualify for reduced sales charges upfront
A is correct; an LOI lets an investor receive breakpoint discounts immediately by committing to a certain investment amount within a specified period. B, C, and D are not benefits of signing an LOI.
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