Podcast
Questions and Answers
What is a breakpoint sale?
What is a breakpoint sale?
- The sale of investment company shares in dollar amounts just below the point at which the sales charge is reduced on quantity transactions to incur the higher sales charge. (correct)
- The sale of investment company shares in dollar amounts at the point at which the sales charge is reduced on quantity transactions to reduce the sales charge.
- The payment of compensation to a registered representative after she ceases to be employed by a member.
- The sale of investment company shares in anticipation of a distribution soon to be paid.
What must an investor do if they purchase a mutual fund based solely on seeing the summary prospectus?
What must an investor do if they purchase a mutual fund based solely on seeing the summary prospectus?
Be able to access a full prospectus no later than confirmation of sale.
A diversified growth fund charging 0.4% of net assets per year as a 12b-1 fee may not make which statement?
A diversified growth fund charging 0.4% of net assets per year as a 12b-1 fee may not make which statement?
- The fund is a no-load fund. (correct)
- The fund will have a calculated fully disclosed expense ratio.
- The fund will have a diversified portfolio with a stated investment objective.
- The fund will pay its investment adviser a specified percentage of funds under management.
Which of the following is not classified as an investment company under the Investment Company Act of 1940?
Which of the following is not classified as an investment company under the Investment Company Act of 1940?
Which class of shares uses a CDSC as the main sales charge?
Which class of shares uses a CDSC as the main sales charge?
Which of the following would cause a change in the net asset value (NAV) of a mutual fund share?
Which of the following would cause a change in the net asset value (NAV) of a mutual fund share?
What is the maximum sales charge for Class A shares?
What is the maximum sales charge for Class A shares?
Which statement about bond mutual funds is false?
Which statement about bond mutual funds is false?
How often must mutual fund shares be priced?
How often must mutual fund shares be priced?
Which action would not increase the NAV per share of a mutual fund?
Which action would not increase the NAV per share of a mutual fund?
Which is not an example of a management company under the Investment Company Act of 1940?
Which is not an example of a management company under the Investment Company Act of 1940?
What must a mutual fund's prospectus disclose if it has been in existence for 15 years?
What must a mutual fund's prospectus disclose if it has been in existence for 15 years?
Which of these would not be included in a mutual fund's list of expenses?
Which of these would not be included in a mutual fund's list of expenses?
Which is not part of the expense ratio of a mutual fund?
Which is not part of the expense ratio of a mutual fund?
What is it called when a fund sponsor allows an investor to move funds between its funds?
What is it called when a fund sponsor allows an investor to move funds between its funds?
Under the Investment Company Act of 1940, which is not considered an investment company?
Under the Investment Company Act of 1940, which is not considered an investment company?
Which of these actions would be unlawful regarding the use of a mutual fund prospectus?
Which of these actions would be unlawful regarding the use of a mutual fund prospectus?
An investor can take advantage of intraday price changes when investing in which?
An investor can take advantage of intraday price changes when investing in which?
From where does the investment return of a variable annuity come?
From where does the investment return of a variable annuity come?
A letter of intent may be backdated to include a prior purchase up to how many days?
A letter of intent may be backdated to include a prior purchase up to how many days?
Class B mutual fund shares are also called?
Class B mutual fund shares are also called?
Flashcards are hidden until you start studying
Study Notes
Mutual Funds Overview
- A breakpoint sale refers to selling investment company shares just below the threshold for reduced sales charges, incurring the higher charge.
- Investors must have access to the full prospectus by the time of sale if they only see the summary prospectus.
Regulatory Framework
- The Investment Company Act of 1940 does not classify private investment companies as investment companies.
- Unit investment trusts are not considered management companies under the Investment Company Act.
Fee Structures and Charges
- A diversified growth fund with a 0.4% 12b-1 fee cannot claim it is a no-load fund.
- Class A shares cannot have sales charges exceeding 8.5% of the total investment.
- Class B shares typically utilize contingent deferred sales charges (CDSC).
Performance and Valuation
- NAV of mutual fund shares is affected by portfolio securities sold for capital gains and decline in market value.
- Mutual fund shares must be priced at least once per business day.
- When many investors deposit funds, the NAV per share remains unchanged despite increased assets.
Disclosure Requirements
- Mutual funds must disclose performance over the last 1, 5, and 10 years if they have existed for 15 years.
Expense Analysis
- Certain costs, such as broker-dealer sales charges and underwriter's sales loads, are not included in a mutual fund's expense list.
- The CDSC is not part of the fund's expense ratio since it is applied against the sale proceeds.
Rights and Privileges
- An exchange privilege allows investors to transfer funds between different funds within the same fund family.
Legal Considerations
- Sending a prospectus to uninterested parties or altering the document is unlawful.
- Highlighting or directing attention to a specific part of a prospectus is prohibited.
Investment Vehicles
- Investors can benefit from intraday price movements with closed-end and exchange-traded funds, unlike open-end funds.
- Variable annuity returns depend on the performance of selected subaccounts within a separate account.
Purchase Agreements
- A letter of intent for mutual fund purchases can be backdated to include prior purchases up to 90 days.
- Class B shares are known as back-end load shares due to their fee structure.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
