SIE practice questioneasyMutual Funds - Loads
A mutual fund charges a front-end sales load. What does this mean for investors?
- AAn annual 12b-1 fee is charged for marketing expenses.
- BA fee is charged when shares are redeemed.
- CA fee is charged when shares are purchased.✓ Correct answer
- DA fee is charged both when purchasing and redeeming shares.
Explanation
Why C — A fee is charged when shares are purchased.
A front-end load is a sales charge paid when shares are purchased. Back-end loads (B) are charged on redemption, 12b-1 fees (C) are ongoing, and both entry and exit fees (D) are not typical of standard mutual funds.
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