SIE practice questioneasyMutual Funds - Breakpoints
An investor wants to invest $55,000 in a mutual fund with breakpoints. What is the purpose of breakpoints?
- ATo reduce the sales charge for larger investments✓ Correct answer
- BTo increase annual fees for frequent trading
- CTo allow redemption at NAV
- DTo guarantee the fund's return
Explanation
Why A — To reduce the sales charge for larger investments
Breakpoints offer reduced sales charges for larger investments, incentivizing higher purchases. They do not raise fees (B), guarantee returns (D), or relate to NAV redemption (C).
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