SIE practice questioneasyMutual Funds - Letters of Intent
An investor wants to qualify for a mutual fund breakpoint by signing a Letter of Intent (LOI). Which is TRUE?
- AThe investor commits to invest enough to qualify for a lower sales charge within 13 months.✓ Correct answer
- BThe LOI guarantees a fixed investment return.
- CThe LOI allows redemption of shares at any time without penalty.
- DThe LOI eliminates all fees on future investments.
Explanation
Why A — The investor commits to invest enough to qualify for a lower sales charge within 13 months.
A Letter of Intent lets investors reach a breakpoint over 13 months for lower sales charges, not guaranteed returns (B), unrestricted redemptions (C), or fee elimination (D).
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