Multiple choice

Transaction costs include

  1. all expenses related to purchase and sale of securities

  2. all expenses charged to the fund

  3. distribution expenses

  4. None of the above
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A Correct answer
Explanation

Transaction costs encompass all expenses directly related to executing purchase and sale of securities in the portfolio, including brokerage, stamp duty, market impact costs, and other trade-related fees. Distribution expenses (marketing, agent commissions) are operational costs, not transaction costs. All fund expenses include both transaction and operational categories.

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