CIFC CIFC Mutual Fund Sales and Distribution

Question 1

What is a deferred sales charge (DSC) in the context of mutual fund sales?

Accepted Answer

A declining redemption fee charged to the investor if units are sold within a set period

Answer

A fee charged to the fund company at purchase

Answer

An annual trailer fee paid to the advisor

Answer

A front-end load waived for large purchases

Question 2

What is a trailer fee (trailing commission) in mutual fund distribution?

Accepted Answer

An ongoing annual fee paid by the fund company to the advisor for servicing the client

Answer

A one-time fee at the time of fund purchase

Answer

A penalty for switching between fund families

Answer

A fee charged when a fund underperforms its benchmark

Question 3

Under CIFC principles, what does 'no-load' mean when describing a mutual fund?

Accepted Answer

There is no sales commission charged to the investor at purchase or redemption

Answer

The fund has no management fee

Answer

The fund carries no risk

Answer

There is no minimum investment required

Question 4

Which distribution channel sells mutual funds exclusively through licensed advisors at a dealer firm?

Accepted Answer

Advisor channel (full-service dealer)

Answer

Direct channel

Answer

Discount brokerage channel

Answer

Bank branch teller

Question 5

A client invests $10,000 in a front-end load fund with a 3% sales charge. How much is actually invested in the fund?

Accepted Answer

$9,700

Answer

$10,300

Answer

$10,000

Answer

$9,970

Question 6

What is the primary advantage of dollar-cost averaging as a mutual fund purchase strategy?

Accepted Answer

It reduces the average cost per unit by buying more units when prices are low

Answer

It guarantees a profit regardless of market conditions

Answer

It eliminates all investment risk

Answer

It maximizes returns by timing market peaks