Podcast
Questions and Answers
Which of the following statements about an established FINRA member firm's handling of a mutual fund's sale literature are TRUE? (Select all that apply)
Which of the following statements about an established FINRA member firm's handling of a mutual fund's sale literature are TRUE? (Select all that apply)
Which of the following describes the price of a Class A mutual fund share paid by a dealer on contract with the fund's underwriter?
Which of the following describes the price of a Class A mutual fund share paid by a dealer on contract with the fund's underwriter?
All of the following are considered public communications EXCEPT:
All of the following are considered public communications EXCEPT:
Under the rules on communications with the public, filing of advertisements must be done:
Under the rules on communications with the public, filing of advertisements must be done:
Signup and view all the answers
Mutual fund shares that carry a level load are:
Mutual fund shares that carry a level load are:
Signup and view all the answers
If an investor liquidates 200 shares of ACE Fund purchased at a POP of $11.60 and with a NAV of $10.60, experiencing a current POP of $12.50 and current NAV of $11.50, what will the outcome be?
If an investor liquidates 200 shares of ACE Fund purchased at a POP of $11.60 and with a NAV of $10.60, experiencing a current POP of $12.50 and current NAV of $11.50, what will the outcome be?
Signup and view all the answers
The definition of retail communication includes:
The definition of retail communication includes:
Signup and view all the answers
A broker/dealer with a sales agreement with a mutual fund must return all concessions to the underwriter if a customer redeems his shares:
A broker/dealer with a sales agreement with a mutual fund must return all concessions to the underwriter if a customer redeems his shares:
Signup and view all the answers
Study Notes
FINRA Regulations on Mutual Fund Literature
- All sales literature for mutual funds requires approval from a firm's principal before use.
- If FINRA reviews the material beforehand, subsequent firms do not need to resubmit it.
- FINRA's review timeline is within 10 days of the material's initial use.
Pricing of Class A Mutual Funds
- Class A mutual fund shares are purchased at net asset value (NAV) plus the underwriter's concession.
- The underwriter sells the shares to the dealer, adding their concession before the public offering price (POP) is set.
Definition of Public Communications
- Prospectuses are not classified as public communications as they are prepared by issuers and not broker/dealers.
- Public communications include telephone directory ads, research reports, and market letters.
Advertising Rules for Established Firms
- Established firms may file advertisements within 10 business days after first use, unlike new firms that must pre-file 10 days in advance.
- This rule applies to firms that have been in operation for over one year.
Mutual Fund Share Classes
- Class C shares carry a level load via a 12b-1 charge, distinguishing them from Class A and B shares, which have front-end and back-end loads, respectively.
Investor Gain/Loss Calculation
- An investor who bought 200 shares at a POP of $11.60 and now liquidates at a NAV of $11.50 incurs a total loss of $20.
- The loss is calculated based on the difference between the purchase price and the liquidation value multiplied by the number of shares.
Understanding Retail Communication
- Research reports are considered retail communication, while memos, emails to investment companies, and television interviews are classified differently.
Redemption and Concessions
- A broker/dealer must return concessions to the underwriter if a customer redeems shares within a specified period following purchase, highlighting the importance of timelines in transactions.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Test your understanding of key concepts related to the handling of mutual fund sale literature by FINRA member firms. This quiz covers essential regulations and requirements that firms must adhere to when promoting mutual funds. Sharpen your knowledge and prepare for your finance exam!
