General Securities Sales Supervisor (Series10) Practice Exam

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What is the maximum sales charge on single purchases of non-12b-1 mutual funds up to $10,000?

8 ½% of the Public Offering Price
8 ½% of Net Asset Value
9% of the Public Offering Price
9% of the Net Asset Value

The correct answer is: 8 ½% of the Public Offering Price

The maximum sales charge on single purchases of non-12b-1 mutual funds up to $10,000 is set at 8 ½% of the Public Offering Price. This regulation is crucial for maintaining a standard approach to how mutual funds can charge their investors, ensuring transparency and fairness in the investment process. When a mutual fund applies a sales charge, it is typically calculated based on the Public Offering Price (POP), which includes the cost of units or shares before any deductions are made. The 8 ½% maximum is specifically defined for non-12b-1 funds, where there are no ongoing distribution fees that would be included in the 12b-1 plan. This maximum allows investors to understand the costs associated with their purchase clearly. Charges are aligned with regulatory standards, which help maintain investor protections and ensure that funds are not unfairly penalized with excessively high initial costs.