Mutual Funds
A fund has an NAV of $12.00 and a 4% front-end sales charge. What is the Public Offering Price (POP)?
POP = NAV / (100% - Sales Charge %) = $12.00 / 0.96 = $12.50. The sales charge is based on the POP, not the NAV.
Complete Analysis & Legal Rationale
POP = NAV / (100% - Sales Charge %) = $12.00 / 0.96 = $12.50. The sales charge is based on the POP, not the NAV.
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:
Does not match the governing securities rule described in the explanation.
Does not match the governing securities rule described in the explanation.
Matches the verified teaching point in the explanation.
Does not match the governing securities rule described in the explanation.
Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.