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vovikov84 [41]
3 years ago
14

A customer buys $10,000 of Government Bond Fund shares from Acme Investors, a fund sponsor and broker-dealer. Acme is the sponso

r for a variety of funds within the Acme "family." The ACME family has an "exchange feature" at NAV. The customer decides to exchange his Government Bond Fund shares for Growth Fund shares within the same family. All of the following statements are true EXCEPT the:_________
A. customer's yield will decrease
B. customer will have greater capital appreciation potential
C. customer will have a tax event
D. customer will pay a sales charge
Business
1 answer:
timofeeve [1]3 years ago
3 0

Answer: customer will pay a sales charge

Explanation:

The statement which states that customer will have to pay sales charge in order to exchange shares within the family is not true. The fund family possesses an "exchange feature" at NAV. This means that the shares of one fund has the right to be redeemed and then reinvested in shares of another fund that is within the family without no sales charge.

For the customer that is exchanging Government bond Fund shares for the Growth Fund shares, tax event has occurred. Therefore, it will be expected that the customer's yield will reduce but that the capital gains will increase, because the person is moving from an "income" fund into a "growth" fund.

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