Investment Company and. Variable Contracts Products Principals (Series 26) Practice Exam

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What is the maximum time allowed to invest toward a breakpoint using a Letter of Intent (LOI)?

6 months
9 months
12 months
13 months

The correct answer is: 13 months

Using a Letter of Intent (LOI) allows an investor to secure a breakpoint discount on mutual fund investments by committing to invest a certain amount over a specified period. The maximum time allowed to complete this investment and qualify for the breakpoint using an LOI is typically 13 months. This timeframe grants investors the flexibility to reach their investment goals while benefiting from lower sales charges that come with larger investments. The LOI serves as an agreement between the investor and the fund, ensuring that as long as the investor fulfills their commitment within that 13-month period, they can enjoy the reduced fees associated with breakpoint levels. This approach encourages investors to consolidate their investments or consider larger contributions without immediate outlay, effectively providing a bridge between their current investment capabilities and long-term financial planning.