Series 6: Exercise

Exercise

Answer the following questions.

1. 1. Which statement is true regarding NAV per share?
2. A. NAV is the amount an investor will pay for her shares in a mutual fund.
3. B. NAV is used to determine breakpoints.
4. C. NAV is calculated just before the markets open on trading days.
5. D. NAV represents the current value of a mutual fund share.
6. 2. If NAV is $10 and the sales charge is 5%, what is POP? (Round to 2 decimal places.)
7. 3. What classes of shares are sold at NAV with no up-front load?
8. I. A shares
9. II. B shares
10. III. C shares
11. IV. D shares
12. A. I and IV
13. B. II and III
14. C. I and III
15. D. III and IV
16. 4. Distribution fees may also be known as:
17. I. Fees paid for marketing and selling fund shares, such as advertising, printing, and mailing
18. II. Front-end fees
19. III. 12b-1 fees
20. IV. Management fees
21. A. II and IV
22. B. I and III
23. C. I and IV
24. D. II and III

Answers

1. 1. D. NAV is calculated after the close of trade each trading day.
2. 2. $10.53. Formula: NAV = POP × (100% – sales charge %)

$10 = POP × (1.00 – 0.05) (changing the percentages to decimals)

$10 = POP × 0.95

$10 / 0.95 = POP (the result of dividing each side of the equation by 0.95)

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