Practice Quiz

FINRA Series 6

Category - Series 6

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Which of the following statements regarding the “rights of accumulation” is true?
  1. All mutual funds that have front-end loads are required to allow their shareholders rights of accumulation.
  2. Reinvested dividends and capital gain distributions count toward reaching a breakpoint under the rights of accumulation.
  3. A breakpoint must be reached within a 13-month period, at which point the accumulation period begins anew.
  4. A letter of intent must be signed to activate the rights of accumulation.
Explanation
Answer: B - The true statement is that reinvested dividends and capital gain distributions count toward reaching a breakpoint under the rights of accumulation. The rights of accumulation is not something that all mutual funds with front-end loads must offer. There is no time limit on the accumulation period. The rights of accumulation and the letter of intent are two separate animals; neither has anything to do with the other.
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