SIE Exam Question 474: Answer and Explanation

Question: 474

A mutual fund that assesses a charge to cover promotional expenses would be charging:

• A. A balanced load.
• B. A redemption charge.
• C. A 12b-1 fee.
• D. A contingent deferred sales charge.

Correct Answer: C

Explanation:

C: A 12b-1 fee is assessed by the mutual fund to cover printing of prospectuses and other promotional materials. It also covers other distribution expenses. It is an annual fee charged quarterly to the shares.