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. What is the purpose of a letter of intent?
A. A letter of intent accompanies the prospectus and explains the terms of sale to potential investors.
B. A letter of intent allows an investor to place a price-per-share bid on an intended purchase.
C. A letter of intent allows an investor to reach a breakpoint now, based on an intent to purchase additional shares in the future.
D. A letter of intent allows an investor to reserve shares for a future purchase at a specified time when he has the money.
5. What is the purpose of rights of accumulation?
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.
B. Rights of accumulation allow an investor to pay a sales charge based on a lower breakpoint calculated by including account accumulation (apprecia