Series 6: Exercise

Taken from our Series 6 Online Guide

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. If NAV is $10 and the sales charge is 5%, what is POP? (Round to 2 decimal places.)

3. What classes of shares are sold at NAV with no up-front 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

4. 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

Answers

1. D. NAV is calculated after the close of trade each trading day.

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)

$10.53 = POP

3. B. B shares and

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