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Exam CIFC Topic 1 Question 120 Discussion
Actual exam question for IFSE Institute's CIFC exam
Question #: 120
Topic #: 1
Question #: 120
Topic #: 1
One of your clients, Rakesh, had a portfolio composed of 60% ABC Equity Fund and 40% ABC Bond Fund.
Since equities were performing much better than fixed income, he had increased his holdings in ABC Equity Fund to 70% and had reduced his holding in ABC Bond Fund to 30% of his portfolio.
After benefitting the growth in his ABC Equity Fund for over 2 years, Rakesh is uncomfortable with this heavy exposure to equity funds and decides to rebalance his portfolio back to 60% of ABC Equity Fund and
40% of ABC Bond Fund.
He instructs you to switch 10% of the portfolio from the ABC Equity Fund to the ABC Bond Fund.
Which of the following statements is CORRECT?
Since equities were performing much better than fixed income, he had increased his holdings in ABC Equity Fund to 70% and had reduced his holding in ABC Bond Fund to 30% of his portfolio.
After benefitting the growth in his ABC Equity Fund for over 2 years, Rakesh is uncomfortable with this heavy exposure to equity funds and decides to rebalance his portfolio back to 60% of ABC Equity Fund and
40% of ABC Bond Fund.
He instructs you to switch 10% of the portfolio from the ABC Equity Fund to the ABC Bond Fund.
Which of the following statements is CORRECT?
Suggested Answer: A Vote an answer
Explanation
Rakesh will not be subjected to a switch fee if it is outlined in the prospectus. A switch fee is a charge that may apply when an investor switches from one fund to another within the same fund family. The prospectus is the legal document that provides information about the fund, including its fees and charges. If the prospectus states that there is no switch fee or that there are certain conditions under which the switch fee is waived, then Rakesh will not have to pay a switch fee. The type of fund (no-load, low-load, or sales charge) does not determine whether there is a switch fee or not, as different fund families may have different policies regarding switch fees. References: Mutual Fund Fees, Prospectus
Rakesh will not be subjected to a switch fee if it is outlined in the prospectus. A switch fee is a charge that may apply when an investor switches from one fund to another within the same fund family. The prospectus is the legal document that provides information about the fund, including its fees and charges. If the prospectus states that there is no switch fee or that there are certain conditions under which the switch fee is waived, then Rakesh will not have to pay a switch fee. The type of fund (no-load, low-load, or sales charge) does not determine whether there is a switch fee or not, as different fund families may have different policies regarding switch fees. References: Mutual Fund Fees, Prospectus
by Ursula at Feb 08, 2024, 04:10 PM
Here are all the actual test exam dumps for IT exams. Most people prepare for the actual exams with our test dumps to pass their exams. So it's critical to choose and actual test pdf to succeed.
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