An investor purchases $45,000 of Class A shares in a mutual fund. The fund's breakpoint schedule offers a reduced sales load at $50,000. The investor signs a letter of intent (LOI) to invest an additional $10,000 within 13 months. Which of the following BEST describes the immediate effect of the LOI?
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AThe LOI locks the investor into a legally binding contract to complete the full $50,000
BThe fund must escrow the entire $45,000 until the LOI is fulfilled
CThe investor receives the $50,000 breakpoint sales load rate on the current $45,000 purchase immediately
DThe reduced load applies only after the investor deposits the additional $10,000
✓ Correct answer: C. The investor receives the $50,000 breakpoint sales load rate on the current $45,000 purchase immediatelyA letter of intent allows investors to receive the breakpoint discount immediately on current purchases, with the understanding they intend to reach the qualifying amount within 13 months; shares are escrowed as collateral but the reduced load applies upfront.
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