FINRA Series 6 Investment Company and Variable Contracts Products Representative ExaminationProcessing Customer Orders and TransactionsMedium
Which of the following is NOT required to be included on a trade confirmation statement for a mutual fund purchase?
- AThe name of the issuer.
- BThe current expense ratio of the fund.
- CThe Net Asset Value (NAV) per share.
- DThe amount of any sales load.
Show answer & explanationAnswer & explanation
Correct answer: B. The current expense ratio of the fund.
Trade confirmations must include essential details about the transaction, such as the NAV, sales load, and issuer name. While important, the fund's expense ratio is typically found in the prospectus or annual report, not on a trade confirmation statement.
Why the other options are wrong
- A. The name of the mutual fund (issuer) is a fundamental piece of information for the transaction.
- C. The NAV per share at which the transaction was executed is a required disclosure.
- D. Any sales load applied to the purchase must be clearly disclosed on the confirmation.
Trade Confirmation Contents (Mutual Funds)
A document sent to a client confirming details of a securities transaction, including price, shares, and fees, but not typically ongoing fund characteristics like expense ratio.
- Must be sent at or before settlement.
- Includes purchase/sale price (NAV/POP), quantity, commissions/sales charges.
- Does not include all detailed fund characteristics.
Memory trick: Confirmation Confirms the Cents, Not the Content's Core.