Question

What is the purpose of LOI (Letter of Intent) for applying for BreakPoints in Sales Charge?

1) To request a reduction in sales charges
2) To express interest in purchasing BreakPoints
3) To apply for a sales charge waiver
4) To negotiate a lower sales charge

Answer 1

The purpose of an LOI in the context of breakpoints in sales charges is to request a reduction in those charges. It signals the investor's intention to invest a specified amount, allowing them to qualify for breakpoints and consequent discounts.The correct answer is option A

Step-by-step explanation:

The purpose of an LOI (Letter of Intent) when applying for breakpoints in sales charges is primarily to request a reduction in sales charges.

A Letter of Intent is a written statement by an investor indicating their intent to invest a certain amount of money over a specific period. By doing this, the investor is eligible for breakpoints, which are discounts on the sales charge that mutual funds offer for larger investments.

An LOI doesn't obligate the investor to follow through with the investment, but it usually does grant them the right to receive the reduced sales charge as if they had already met the breakpoint threshold. Hence, the correct answer is option A 'To request a reduction in sales charges'.