A 12b-1 Fee Is a Hidden Load Because It Increases

question 109

True/False

A 12b-1 fee is a hidden load because it increases a shareholder's earning power each year without being described as a sales commission.

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Definitions:

NPV

Net Present Value, a calculation that compares the value of all cash inflows and outflows of a project or investment using a discount rate.

Cash Inflows

The movement of money into a business or project, typically from operations, financing, or investing activities.

IRR

Internal Rate of Return; a financial metric used to estimate the profitability of potential investments, calculating the discount rate that makes the net present value of all cash flows equal to zero.

NPV

Net Present Value is a method used to evaluate the attractiveness of an investment or project by calculating the present value of expected future cash flows using a specific discount rate.