A 1 to 5 percent fee that investors pay when they withdraw their investment from a mutual fund is called a:

Question

Quizplus · Accepted Answer

The 1 to 5 percent fee that investors pay when they withdraw their investment from a mutual fund is known as a contingent deferred sales load (CDSC). This is a type of back-end load that is charged when an investor sells the mutual fund shares. The purpose of the CDSC is to discourage short-term trading by investors and to compensate the fund for costs associated with selling investments to meet the redemption request. This fee is different from a front-end load, which is charged when investors buy into a mutual fund. The 12b-1 fee is an annual fee that mutual funds charge investors for marketing and distribution expenses, while the management fee is a fee charged by the fund for managing the investments in the fund.

A 1 to 5 Percent Fee That Investors Pay When