SIE practice questionhardMutual Funds - Letters of Intent
If an investor fails to fulfill an LOI, what happens to the previously reduced sales charges?
- AThe investor must pay the difference in sales charges retroactively.✓ Correct answer
- BThe fund eliminates all sales charges.
- CThe reduced charge remains with no adjustment.
- DThe investor is barred from future investments.
Explanation
Why A — The investor must pay the difference in sales charges retroactively.
If the LOI commitment is not met, the fund collects the difference between reduced and full sales charges. Sales charges are not forgiven or left unchanged.
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