FINRA Series 6 Investment Company and Variable Contracts Products Representative ExaminationProcessing Customer Orders and TransactionsMedium
Which of the following is a required item on a trade confirmation statement for a mutual fund purchase?
- AThe sales charge expressed as a percentage of the offering price.
- BThe current net asset value (NAV) of the fund.
- CThe commission paid to the registered representative.
- DThe name and address of the beneficial owner.
Show answer & explanationAnswer & explanation
Correct answer: A. The sales charge expressed as a percentage of the offering price.
FINRA Rule 2232 (Customer Confirmations) requires specific information to be included on trade confirmations. For mutual funds, this includes the sales charge expressed as a percentage of the offering price. The beneficial owner's name and address are internal account details, not typically on the confirmation itself, and commissions paid to reps are not disclosed to clients on confirmations.
Why the other options are wrong
- B. While NAV is used in pricing, the confirmation typically shows the POP, not just NAV.
- C. Commissions paid to individual representatives are generally not disclosed on customer confirmations.
- D. This is client account information, not a detail for the confirmation statement itself.
Mutual Fund Trade Confirmation
A document sent to a client detailing the specifics of a mutual fund transaction.
- Mandated by FINRA Rule 2232.
- Includes purchase/sale details.
- Must disclose sales charges.
Memory trick: Confirm the trade, charge is displayed.