Exercise
Answer the following questions
- 1. Which statement is true regarding NAV per share?
- A. NAV is the amount an investor will pay for her shares in a mutual fund.
- B. NAV is used to determine breakpoints.
- C. NAV is calculated just before the markets open on trading days.
- D. NAV represents the current value of a mutual fund share.
- 2. What classes of shares are sold at NAV with no front-end load?
- I. A shares
- II. B shares
- III. C shares
- IV. D shares
- A. I and IV
- B. II and III
- C. I and III
- D. III and IV
- 3. Distribution fees may also be known as:
- I. Fees paid for marketing and selling fund shares, such as advertising, printing, and mailing
- II. Front-end fees
- III. 12b-1 fees
- IV. Management fees
- A. II and IV
- B. I and III
- C. I and IV
- D. II and III
- 4. John purchases a growth fund with a contingent deferred sales charge. Three years later, he has an unfortunate accident and is unable to work. He now needs income to supplement his disability. What do you advise?
- A. Choose an income or bond fund within the same family of funds, because he will not be charged a new sales charge or be taxed on any gains made on the sale of the growth fund.
- B. Choose an income or bond fund within the same family of funds, because he will not be charged a new sales charge, but he will taxed on any gains made on the sale of the growth fund.
- C. Choose an income or bond fund within the same family of funds while he will be charged a new sales charge, he will not be taxed on any gains made on the sale of the growth fund.
- D. It doesn’t matter whether Jon chooses a different fund within the same family or not, because he will still be charged a new sales charge and be taxed on any gains made on the sale of the growth fund.
- 5. What is the purpose of a letter of intent?
- A. A letter of inten