FINRA Series 6 Investment Company and Variable Contracts Products Representative ExaminationProcessing Customer Orders and TransactionsMedium
A client receives a trade confirmation for a recent purchase of mutual fund shares. Which of the following details is NOT required to be included on this confirmation statement?
- AThe commission charged in dollars.
- BThe Public Offering Price (POP) per share.
- CThe Net Asset Value (NAV) per share.
- DThe current expense ratio of the fund.
Show answer & explanationAnswer & explanation
Correct answer: D. The current expense ratio of the fund.
Trade confirmations must include details specific to the transaction, such as price, quantity, and sales charges. The expense ratio is an ongoing operational cost of the fund, disclosed in the prospectus, but not a transaction-specific detail required on the trade confirmation.
Why the other options are wrong
- A. This is a required detail, as it represents the sales charge or commission for the transaction.
- B. This is a required detail, as it is the price paid per share.
- C. This is a required detail, as it shows the underlying value before the sales charge.
Mutual Fund Trade Confirmation Contents
A document sent to a client after a mutual fund transaction, detailing key aspects of the purchase or sale.
- Must include date, quantity, price, and sales charge.
- Must show Public Offering Price (POP) and Net Asset Value (NAV).
- Does NOT include ongoing fund characteristics like expense ratio.
Memory trick: Confirmation shows 'WHAT you BOUGHT and for HOW MUCH', not the fund's 'OVERHEAD'.