SIE: Exercise

Exercise

Choose the correct answer.

1. 1. Which statement is true regarding NAV per share?
2. A. NAV is the amount an investor will pay for her shares in a mutual fund.
3. B. NAV is used to determine breakpoints.
4. C. NAV is calculated just before the markets open on trading days.
5. D. NAV represents the current value of a mutual fund share.
6. 2. What classes of shares are sold at NAV with no up-front load?
7. I. A shares
8. II. B shares
9. III. C shares
10. IV. H shares
11. A. I and IV
12. B. II and III
13. C. I and III
14. D. III and IV
15. 3. Distribution fees may also be known as:
16. I. Fees paid for marketing and selling fund shares, such as advertising, printing, and mailing
17. II. Front-end fees
18. III. 12b-1 fees
19. IV. Management fees
20. A. II and IV
21. B. I and III
22. C. I and IV
23. D. II and III
24. 4. What is the purpose of a letter of intent?
25. A. A letter of intent accompanies the prospectus and explains the terms of sale to potential investors.
26. B. A letter of intent allows an investor to place a price-per-share bid on an intended purchase.
27. C. A letter of intent allows an investor to pay a sales charge based on a lower breakpoint on sales during a specified period of time.
28. D. A letter of intent allows an investor to reserve shares for a future purchase at a specified time when he has the money.
29. 5. What is the purpose of rights of accumulation?
30. A. Rights of accumulation allow an investor to choose whether to apply accumulation (appreciation) in her account to cash dividends or purchase of new shares.
31. B. Rights of accumulation allow an investor to pay a sales charge based on a lower breakpoint calculated by including account accumulation (appreciation) and new investment funds.
32. C. “Rights of accumulation” is an IRS term that helps define capital tax rates paid on acc