Question

An 8.5% sales charge (based on the POP) is:

a. A front-end load
b. A back-end load
c. A level-load
d. A contingent deferred sales charge

Answer 1

An 8.5% sales charge is a front-end load, which is deducted from the investor's initial investment to cover marketing and distribution costs of a mutual fund.

Step-by-step explanation:

An 8.5% sales charge is a fee or commission charged by a financial institution when an investor buys shares of a mutual fund. In this case, the sales charge represents 8.5% of the Public Offering Price (POP), which is the price at which the mutual fund shares are offered to investors. This type of sales charge is known as a front-end load. A front-end load is deducted from the investor's initial investment and is used to cover the costs associated with marketing and distribution of the mutual fund.