Which of the Following Is Not Correct About the 12b-1

question 99

Multiple Choice

Which of the following is not correct about the 12b-1 fee?

• A) It is also known as a distribution fee.
• B) A no-load fund can charge a 12b-1 fee of up to 0.25% of its assets.
• C) It is often an ongoing fee that is charged on an annual basis.
• D) It needs to be disclosed in the annual report but not in the prospectus.
• E) It is used to defray the costs of advertising and marketing a mutual fund and commissions paid to a broker who sold shares in the mutual fund.

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Definitions:

Rustbucket

A term often used to describe an old, deteriorating vehicle or machinery that is in poor condition and possibly nearing the end of its useful life.

Used Cars

Pre-owned vehicles that have previously had one or more retail owners, available for purchase in the secondary market.

Equilibrium

A condition or state where economic forces such as supply and demand are balanced and, in the absence of external influences, the values of economic variables do not change.

Lemons

A term popularized in economics referring to the problem of asymmetric information concerning the quality of products, specifically used in the context of used cars.