Practice Quiz

FINRA Series 7

Category - Series 7

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The Bubba Fund is a load mutual fund that offers a reinvestment plan. What does this mean?
  1. purchasers of fund shares must agree to make regular investments over a period of years
  2. income, dividend, and capital gain distributions may be automatically used to purchase new shares of the fund
  3. holders of fund shares are permitted to regularly purchase additional shares at the bid price
  4. no federal income taxes are paid on dividends and capital gain distributions from the fund
Explanation
Answer: B - income, dividend, and capital gain distributions may be automatically used to purchase new shares of the fund. The new purchases are at the ask price, not the bid price.
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