Practice Quiz

FINRA Series 7

Category - Series 7

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Bubba wishes to invest $50,000 in three mutual funds offered by different underwriters with growth as the main objective. A recommendation to purchase only one such fund for $50,000 might be more suitable to Bubba if:
  1. the growth in one fund will be greater than the combined growth in three
  2. the income from one fund will be greater than the combined income in three
  3. a withdrawal plan would be easier to employ using a single fund
  4. the purchase of one fund would probably be made at a break point allowing more dollars to be invested in fund shares
Explanation
Answer: D - the purchase of one fund would probably be made at a break point allowing more dollars to be invested in fund shares. There is nothing inherently unsuitable about recommending three different funds. However, in most cases, a single fund offers satisfactory diversification and can be purchased with a reduction in sales charge.
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