Multiple choice

The annualized value of contingent differed sales charge would

  1. increase if the investor stays with the fund longer

  2. remain content regardless of how long the investor stays with the fund

  3. decrease if the investor stays with the fund longer

  4. none of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Contingent Deferred Sales Charge (CDSC) decreases over time as the investor holds the fund longer - this is how it incentivizes long-term investment. The annualized value decreases because the total charge is spread over a longer holding period, and the charge percentage typically declines each year.

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