A customer has $24,000 to invest in mutual fund shares. The registered representative advises the customer to invest $8,000 on ABCD fund; $8,000 in DEFF fund; and $8,000 in XYZZ fund; to give the customer complete diversification and reduce risk. These 3 funds all have different sponsors. This action is: A) appropriate for the customer B) a violation known as a breakpoint sale C) a violation known as spinning D) a violation known as interpositioning

Option B

This action is: a violation known as a breakpoint sale

Explanation:

Dividing consumer buying amounts will refuse the buyer the profit of the breakpoint. This is a crime recognized as a breakpoint sale. The whole amount should be spent in one fund or one fund family to provide the consumer with the most economical feasible sales cost. Since shared funds hold diversified responsibilities, the evidence that breaking the purchases additional raises diversification, and thus will decrease risk, is questionable. Mutual fund sales quantity refunds are possible when a client spends with a mutual fund family.

the answer is a.

by: nicholas dooley