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The MaxCharge fund has a 5% front-end load and a 12b-1 fee that is 0.25% of its average net assets. Under these conditions, any rear-end load, it may have, is limited to:
Suggested Answer: D
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Since the MaxCharge fund has a 5% front-end load and a 12b -1 fee that is 0.25% of its average net assets, any rear-end load, it may have, is limited to 3.25%. The maximum sales charge that is allowed is 8.5%, and this includes the front-end load, rear-end load, and 12b-1 fee. Since MaxCharge has a front-end load and a 12b-1 fee that totals 5.25%, its rear-end load is limited to 8.5% - 5.25% = 3.25%.
26 comments · newest first
NA
Naomi
9 hours ago
I’m leaning towards option D. The math seems to fit.
MA
Marguerita
6 days ago
Agreed! The front-end load and 12b-1 fee are key.
NI
Nieves
11 days ago
This question is tricky! I think it’s about understanding the fees.
HI
Hillary
16 days ago
I’ll go with C) too, feels right.
WI
William
21 days ago
Exactly, C) balances the loads better.
ER
Erick
26 days ago
I doubt D) fits with the other fees.
HI
Hillary
1 month ago
But what about D) 3.25%? It could be a possibility.
WI
William
1 month ago
C) makes sense with the 5% front-end load.
ER
Erick
1 month ago
Right? I’m leaning towards C) 4.75%.
HI
Hillary
2 months ago
I feel like A) 2.00% is too low.
WI
William
2 months ago
I think it’s about understanding the fees.
ER
Erick
2 months ago
This question is tricky.
WA
Wai
2 months ago
Definitely 3.25%. Simple math!
GI
Gilma
2 months ago
I’m not sure about that. 4.75% sounds too high.
EM
Emmett
2 months ago
Wait, how does the 12b-1 fee factor into this?
BR
Brunilda
3 months ago
I think it’s 4.25%. Seems right to me!
WA
Wade
3 months ago
The front-end load is 5%, so that affects the rear-end load limit.
LA
Lawrence
3 months ago
How can a fund have a rear-end load if it already has a front-end load? Sounds off.
CH
Chana
3 months ago
I’m leaning towards 3.25%. Makes sense to me!
DE
Delmy
3 months ago
Wait, are we sure about the 12b-1 fee? Seems low.
OL
Olene
3 months ago
I think it’s definitely 4.25%.
MA
Marsha
4 months ago
The front-end load is 5%, so that affects the rear-end load limit.
DE
Desmond
4 months ago
I thought the limit was related to the total fees, but I’m confused about how the front-end load affects the rear-end load.
VI
Virgilio
4 months ago
I feel like the answer might be 3.25%, but I can't recall the exact formula we used in class.
PE
Pearly
4 months ago
I think I practiced a similar question where we had to find the maximum rear-end load based on other fees. Could it be 4.25%?
VI
Viva
4 months ago
I remember something about the total of front-end loads and 12b-1 fees needing to stay under a certain limit, but I'm not sure how to calculate it exactly.