Question

NovelOptions mutual funds charge a 0.75% load when investors buy less than $10,000 in shares but no load if an investor buys over $10,000 in shares. Fiona has $14,000 to invest and her broker recommends buying $9,000 of NovelOptions mutual funds and $5,000 in U.S. Treasury bonds. What unethical or illegal action has the broker committed?


Select the best answer from the choices provided.
breakpoint violation
churning
chasing returns
unauthorized trading

Answer 1

@jim_thompson5910

Answer 2

@JoannaBlackwelder

Answer 3

http://www.investopedia.com/terms/b/breakpoint.asp

Answer 4

its A ?

Answer 5

@JoannaBlackwelder

Answer 6

That 's what I get. :)

Answer 7

lets see what Jim gotta say

Answer 8

I agree with JoannaBlackwelder

Read that article and it explains how there's a limit where the more you invest, the less they charge you as the front-end fees. However, this broker is telling the client to invest less, which translates into a higher front-end fee. It seems like the broker has not told the client about the breakpoint, or else the client would invest just a bit more (since they are able to do so)

Answer 9

okay its Breakingpoint