Load

B is correct. For a 2-year investment horizon, avoiding the immediate 5.75% front-end load ($4,312.50 on $75,000) is more advantageous than the higher ongoing expense ratio. With Class B shares, Marcus would pay a CDSC of approximately 4% when redeeming after 2 years (based on typical declining schedules), plus 2 years of the 0.75% expense ratio difference ($1,125 total). Total costs: ~$3,000 CDSC + $1,125 in extra expenses = ~$4,125, which is less than the $4,312.50 front-end load.

A is incorrect because front-end loads are one-time charges, not spread over time, and they immediately reduce the invested amount. While lower ongoing fees do benefit longer-term holders, the math doesn't work for a 2-year horizon. C incorrectly assumes Class C shares (which weren't presented as an option) are automatically best for short timeframes. D is too restrictive; load funds can be suitable depending on individual circumstances, breakpoints, and fee structures.

C is correct. FINRA limits front-end sales loads to a maximum of 8.50% of the offering price (public offering price, or POP). This is calculated as a percentage of the gross investment amount, not the net amount invested.

A (5.00%) is below the regulatory maximum and represents a common load charge but not the limit. B (6.25%) is not a standard regulatory threshold for loads. D (10.00%) exceeds FINRA's maximum permissible load. While most funds charge less than 8.50%, understanding the regulatory ceiling is important for compliance and exam purposes.

C is correct. Calculate: $50,000 × 0.0475 (4.75%) = $2,375 sales charge. Subtract from gross investment: $50,000 - $2,375 = $47,625 net amount invested in fund shares. The front-end load is calculated as a percentage of the offering price (the total amount the investor pays), and this charge is deducted before purchasing shares.

A ($47,375) would result from incorrectly using a 5.25% load ($50,000 - $2,625). B ($47,500) would result from using a 5.00% load instead of 4.75% ($50,000 - $2,500). D ($48,812.50) incorrectly uses 2.375% (half the actual load percentage) for the calculation ($50,000 - $1,187.50).

C is correct (the EXCEPT answer). CDSC charges do NOT apply to all redemptions universally. Most funds allow investors to redeem shares purchased with reinvested dividends and capital gains distributions without CDSC charges. Additionally, many funds permit annual redemptions up to a certain percentage (often 10-12% of account value) without triggering CDSC.

A is accurate: CDSC schedules typically start at 5-6% in year one and decline annually, reaching 0% after a holding period of 6-8 years. B is accurate: CDSC is calculated on the lesser of the original purchase price or current NAV, protecting investors from paying sales charges on investment losses. D is accurate: Class B shares characteristically use CDSC as their sales charge structure instead of front-end loads, making them distinct from Class A shares.

B is correct. Only statements 2 and 3 would reduce the sales charge below the standard 4.50% load.

Statement 1 is FALSE: Investing $95,000 now would apply the 4.50% load ($4,275 charge) since it falls in the $50,000-$99,999 tier. This doesn't reduce the charge; it's simply the standard rate for this investment amount.

Statement 2 is TRUE: By signing a letter of intent to invest $100,000 within 13 months, the investor immediately qualifies for the 3.75% load ($95,000 × 3.75% = $3,562.50), saving $712.50 compared to the 4.50% load. The remaining $5,000 must be invested within the timeframe to avoid retroactive charges.

Statement 3 is TRUE: Rights of accumulation allow the investor to combine the current $95,000 purchase with $15,000 in existing holdings ($110,000 total) to immediately qualify for the 3.75% load on the new purchase, reducing the sales charge from 4.50% to 3.75%.

Statement 4 is FALSE: This strategy is impractical and unnecessarily delays the investment. The investor would need an additional $155,000 (for $250,000 total) to reach the lowest breakpoint, and waiting sacrifices potential market gains during the delay period.