Ch 4&5 Flashcards
(218 cards)
According to industry rules what percent is the maximum sales charge a mutual funds
8.5
What Price is paid for mutual fund shares
Public offering price
POP=NAV+sales charge (if applicable)
What does the following quote indicate about the fund
NAV: $9.20. POP: $9.20
It’s a no load fund
Sales charge is always expressed as a percentage of the——/
Pop
To calculate the sales charge percentage for a mutual fund the formula is
(Pop-NAV)/pop
To calculate the PO P for a mutual fund the formula is
NAV/(100%-sales charge%)
Define breakpoint
Dollar levels of investment purchases that qualify for a reduced sales charge
What is the formula for determining the number of shares able to be purchased when reaching a breakpoint
Dollars invested divided by newly calculated offering price (based on the reduced sales charge)
Letters of intent are valid for blank months
13
Letters of intent may be backdated for blank days
90
Is a letter of intent binding on the investor
No. However the letter is binding on the investment company
True or false if a mutual fund investor chooses to reinvest dividends taxes will be deferred
False
Funds offer _________\to allow buyers to add all purchases made from a fund family to reduce sales charge
Rights of accumulation
True or false to lower sales charges investors add mutual fund purchases in all accounts using rights of accumulation
True however the purchases must all be from the same fund family
A _________fund is one that invest in a specific industry or geographic region
Sector of specialized
Into what does a growth fund invest
Common stock
If a client goal is preservation of the principal what fund would be most appropriate
Money market fund
A fund who’s portfolio is created to mirror the composition of a particular index is referred to as an _______fund
Index
Describe a typical Index funds expenses and management style
The expenses are generally low and it is passively managed
_______ is the balancing of investment classes according to an investors investment objectives
Asset allocation
What is a funds net investment income
Dividends + interest -expenses
True or false regulated investment companies (under subchapter M ) may relieve their burden of paying tax on income
True regulated investment companies will only be taxed on the income retained
What are the requirements for being considered a regulated investment company
The fund must be a domestic company that distributes at least 90% of its net investment income
A regulated investment companies net investment income will ultimately be taxed to the__________
Shareholders