SIE practice questionmediumMutual Funds - Expense Ratios
A mutual fund’s expense ratio measures:
- AThe annual operating expenses as a percentage of average net assets✓ Correct answer
- BSales charges plus 12b-1 fees
- CTotal earnings divided by assets under management
- DCapital gains distributions to investors
Explanation
Why A — The annual operating expenses as a percentage of average net assets
The expense ratio gauges ongoing costs of managing the fund, not sales charges or distributions. B, C, and D are incorrect.
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