Question

Match each type of fee that mutual funds charge investors with its correct description. Tiles 12b-1 distribution fee account maintenance fee revenue-sharing fee shareholder service fee Pairs 25 percent broker fee charged against the mutual fund for servicing the account arrowBoth $20 broker fee charged against the mutual fund arrowBoth management company pays brokers 0.1 percent fee for marketing the fund arrowBoth payment to companies that investors go through to buy mutual funds arrowBoth

Answer 1

shareholder service fee - 25 percent broker fee charged against the mutual fund for servicing the account

account maintenance fee - $20 broker fee charged against the mutual fund

revenue-sharing fee  - management company pays brokers 0.1 percent fee for marketing the fund

12b-1 distribution fee  - payment to companies that investors go through to buy mutual funds

Answer 2

The correct matches are as follows:
1. DISTRIBUTION FEE: Management companies pay brokers 0.1% fee for marketing the fund.
In mutual fund business, distribution fee refers to the amount of money that is charged for marketing and selling fund shares. The money is used for such thing as compensating the brokers or those who sell the fund shares, paying for advertisement, printing and mailing of sales literature, etc. The distribution fee is typically capped at 0.75% of mutual asset. 

2. ACCOUNT MAINTENANCE FEE: $20 broker fee charged against the mutual fund.
This is the amount of money that a broker charges for maintaing each mutual fund in an account. The fee is paid on a yearly basis by the mutual fund to the broker. Thus, for an investor who hold five mutual funds, his broker will be paid $100 every year.

3. REVENUE SHARING FEE: Payment to company that investors go through to buy the mutual funds.
Revenue sharing is said to occur when the mutual fund company makes payment to the broker or a dealer that is involved in the investment. Revenue sharing can take many form and is usually calculated as a percentage of the invested amount. Revenue sharing serves as incentives to  brokers to promote one fund relative to another.

4. SHAREHOLDER SERVICE FEE: 25% broker fee charged against the mutual fund for servicing the account.
 This is the amount of money that a broker is paid for servicing an account. Under the current regulations, a broker can be paid as much as 0.25% of the worth of a mutual investment as a payment for servicing the account.  
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