Mutual Fund Sales Charge Percentage Formula
A mutual fund has an NAV of $11.40 and a POP of $12.00. What is the sales charge percentage?
Sales Charge % = (POP - NAV) ÷ POP = ($12.00 - $11.40) ÷ $12.00 = $0.60 ÷ $12.00 = 5.00%.
Complete Analysis & Legal Rationale
The sales load percentage is always divided by the POP (the asking price paid by the public), NOT the NAV. Dividing $0.60 by $11.40 yields 5.26%, which is the common distractor trap.
Mathematical Step-by-Step Derivation
- Step 1: Dollar Sales Charge = POP ($12.00) - NAV ($11.40) = $0.60.
- Step 2: Formula: Sales Charge % = Dollar Load ÷ POP.
- Step 3: $0.60 ÷ $12.00 = 0.05 = 5.00%.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
$0.60 ÷ $12.00 = 5.00% sales charge.
Divides by NAV ($0.60 ÷ $11.40 = 5.26%), the classic FINRA exam trap.
Subtracts cents directly as a percent.
Arbitrary figure.
Official Standard: Mandates sales load expression as percentage of POP.