Products & Their RisksQuestion 111 of 398
A mutual fund's expense ratio measures:
a.The front-end sales load as a percent of the offering price
b.The fund's dividend yield
c.Annual operating expenses as a percentage of the fund's average net assets
d.The bid-ask spread on the fund's shares
Explanation
The expense ratio expresses a fund's annual operating costs, including management fees, 12b-1 fees, and administrative expenses, as a percentage of its average net assets. A higher expense ratio directly reduces investor returns, so comparing expense ratios is important when selecting among similar funds.
Law Reference: Investment Company Act of 1940Practice all 398 questions free — no signup required.
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