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Finra Series-6 Exam - Topic 7 Question 18 Discussion

Actual exam question for Finra's Series-6 exam
Question #: 18
Topic #: 7
[All Series-6 Questions]

Which of the following are included in the expense ratio of a fund?

i. 12b-1 fees

ii. brokerage costs incurred by the fund when it buys and sells securities

iii. redemption fees

IV. management fees

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Suggested Answer: A

Of the selections, only 12b-1 fees and management fees are included in the expense ratio of the fund. Brokerage costs that the fund incurs when it buys and sells securities are not included (which is why a fund's turnover ratio is important to consider.) Redemption fees are paid by the shareholder to the fund, so it would not be included in a fund's expense ratio since it is not an expense of the fund.


by Dyan at May 08, 2022, 10:52 AM

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Jacquelyne
3 months ago
Yeah, I agree with B, that makes the most sense!
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Sabra
3 months ago
Not sure about that, I thought those were separate.
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Davida
3 months ago
Wait, redemption fees count in the expense ratio? That’s surprising!
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Minna
4 months ago
I think brokerage costs should be in there too!
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Miesha
4 months ago
12b-1 fees and management fees are definitely included.
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Cathrine
4 months ago
I feel like all four options could be included based on what I reviewed, but I need to double-check if redemption fees really count in the expense ratio.
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Hollis
4 months ago
I’m pretty confident that management fees are included, but I’m a bit hazy on whether brokerage costs are part of it or not.
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Joanne
4 months ago
I think I saw a similar question where they asked about what counts in the expense ratio, and I feel like redemption fees might not be included.
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Juan
5 months ago
I remember studying that 12b-1 fees and management fees are definitely part of the expense ratio, but I'm not sure about the brokerage costs.
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Catalina
5 months ago
This question seems straightforward, I think I can handle it.
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Alonso
5 months ago
Hmm, this looks like a tricky one. I'll need to carefully go through the given information and the formula for calculating EFP.
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