SIE practice questioneasyMutual Funds — Expense Ratio
A mutual fund's expense ratio includes all of the following EXCEPT:
- AAdministrative expenses
- BFront-end sales loads✓ Correct answer
- C12b-1 fees
- DManagement fees
Explanation
Why B — Front-end sales loads
The expense ratio includes ongoing operating costs deducted from fund assets: management fees, 12b-1 fees, and administrative expenses. Front-end sales loads are one-time charges paid at the time of purchase and are NOT included in the expense ratio. The expense ratio is expressed as an annual percentage of average net assets and reduces the fund's return.
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