FINRA Securities Industry Essentials Exam (SIE) SIE Question # 39 Topic 4 Discussion
SIE Exam Topic 4 Question 39 Discussion:
Question #: 39
Topic #: 4
An investor wants to purchase mutual fund shares, but she is concerned about the tax efficiency of the fund. Which of the following disclosures required under industry regulations will help the investor make an informed decision?
A.
The fund's turnover ratio
B.
Sales charges and breakpoint discount opportunities
C.
The commissions that the fund pays on each transaction
D.
Projections of future dividend and capital gains distributions
Turnover Ratio: Indicates how frequently the fund manager buys and sells securities. A high turnover ratio may result in higher capital gains distributions, impacting tax efficiency.
Incorrect Options:
B: Sales charges affect cost but not tax efficiency.
C: Commission details are unrelated to the fund’s tax efficiency.
D: Projections of distributions are speculative and not disclosed under regulations.
SEC Mutual Fund Guide: SEC Mutual Funds.
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