Series 6: Exercise

Taken from our Series 6 Top-off Online Guide

Exercise

Answer the following questions.

  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. If NAV is $10 and the sales charge is 5%, what is POP? (Round to 2 decimal places.)
  7. 3. What classes of shares are sold at NAV with no up-front load?
  8. I. A shares
  9. II. B shares
  10. III. C shares
  11. IV. D shares
  12. A. I and IV
  13. B. II and III
  14. C. I and III
  15. D. III and IV
  16. 4. Distribution fees may also be known as:
  17. I. Fees paid for marketing and selling fund shares, such as advertising, printing, and mailing
  18. II. Front-end fees
  19. III. 12b-1 fees
  20. IV. Management fees
  21. A. II and IV
  22. B. I and III
  23. C. I and IV
  24. D. II and III

Answers

  1. 1. D. NAV is calculated after the close of trade each trading day.
  2. 2. $10.53. Formula: NAV = POP × (100% – sales charge %)

$10 = POP × (1.00 – 0.05) (changing the percentages to decimals)

$10 = POP × 0.95

$10 / 0.95 = POP (the result of dividing each side of the equation by 0.95)

$

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