A/An ________ imposes a front-end sales charge when buying the fund typically in the range of 3 percent.
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A. B. C. D.A
A low-load fund imposes a front-end sales charge when buying the fund typically in the range of 3 percent instead of the typical load fund charge of 7 to 8 percent.
The correct answer to the question is A. low-load fund.
A low-load fund is a type of mutual fund that imposes a front-end sales charge when buying the fund, typically in the range of 3 percent. This means that when an investor purchases shares of a low-load fund, a certain percentage of the investment amount is deducted as a sales charge or load fee.
It is important to understand the distinction between different types of mutual funds in terms of sales charges:
No-load funds (option B) do not impose any front-end sales charges. Investors can buy shares of these funds directly from the fund company or through a broker without incurring any additional fees.
Closed-end funds (option D) are investment companies that issue a fixed number of shares through an initial public offering (IPO) and trade on a stock exchange. They do not typically impose front-end sales charges. Instead, investors may pay a premium or discount to the fund's net asset value (NAV) when buying or selling shares.
Oversubscribed funds (option C) are not a recognized category of mutual funds. The term "oversubscribed" usually refers to a situation where the demand for shares of a new fund offering exceeds the number of shares available.
Given these descriptions, the correct answer is A. low-load fund, as it specifically mentions a front-end sales charge of around 3 percent, which aligns with the characteristics of a low-load fund.