Unit quiz: Fees, Taxes, Statements, and Debt: Reading the Documents

Check understanding, separately from reading

5 questions · 80% to pass · no timer. This quiz checks the lessons in this unit. These authored questions assess recognition and application of the taught distinctions, not professional qualification. You may review the lessons and retry. Repeat attempts reuse the question bank; a remembered answer is not proof of transfer to a new situation.

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Question 1

A fund's marketing page shows a ten-year average return. The prospectus shows the same fund with three share classes and three different expense ratios. What does the difference between the two sources establish?That the marketing figure is not comparable until the class, period, and fee basis are identifiedThat the prospectus is more precise and therefore must be the higher figure

Question 2

An adviser describes a 0.75 percentage-point fee difference as 'negligible'. On $50,000 growing for thirty years at a hypothetical 6% gross, how does that description hold up?Well; a difference below one percent is a rounding matterPoorly; the difference is about $55,097 because the fee is charged on a compounding base

Question 3

A colleague says a tax-free account is 'better because no tax is ever paid on the growth' and a deductible account is 'worse because the whole balance is taxed later'. Under a constant rate, what does the arithmetic show?Neither is better; the two produce the same figure when the rates matchThe tax-free account is better by roughly the tax paid on the original contribution

Question 4

A company reports a $30,000 profit while receivables rose $50,000, depreciation was $8,000, and no capital spending occurred. An analyst calls the year 'a solid cash-generating year'. What does the reconciliation show?Operations generated $38,000 because depreciation is added backOperations consumed $12,000 of cash despite the reported profit

Question 5

A borrower has $500 a month available, three debts, and two possible payoff orders. A promoter says any plan will take about the same time and charges a fee for 'optimizing' the order. What is the strongest criticism?The order is a modest optimization; the size of the extra payment and the guarantee are what need scrutinyThe order is irrelevant, so no analysis of the debts is needed

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