SIE Exam Question 335: Answer and Explanation

Question: 335

The threshold to qualify for a sales charge discount on a mutual fund is $75,000. An investor places an order for $72,500 of this fund and is not informed by the registered rep that he would be entitled to a sales charge discount if he invests an additional $2,500. This is an example of a

• A. letter of intent.
• B. breakpoint.
• C. value investor.
• D. breakpoint sale.

Correct Answer: D

Explanation:

D - A "breakpoint sale" is a violation that occurs when a registered rep does not disclose to the customer the opportunity to take advantage of a sales charge discount, or "breakpoint".