Question

The fee charged by some mutual fund companies if shares are redeemed within a specified time after being purchased is known as a:

A) breakpoint fee.
B)contingent deferred sales charge.
C)forward pricing fee.
D)12b-1 fee.

Answer 1

The fee referred to in the question, imposed by mutual fund companies for early redemption of shares, is known as a B) contingent deferred sales charge (CDSC).

Step-by-step explanation:

The fee charged by some mutual fund companies if shares are redeemed within a specified time after being purchased is known as a contingent deferred sales charge (CDSC). This fee typically decreases the longer the investor holds the shares and is intended to discourage quick trading that can be costly for the fund. Other fees mentioned, such as the breakpoint fee, forward pricing fee, and 12b-1 fee, serve different purposes. A breakpoint fee is associated with volume discounts in sales charges, a forward pricing fee pertains to the timing of mutual fund share transactions, and a 12b-1 fee is an annual marketing or distribution fee.