Question of the Week

An individual has started investments of $100/month into a spread-load, periodic payment plan. What is the maximum sales charge that may be taken by the company over the first 48 months?

a) $432
b) $768
c) $960
d) $2,400

Answer:

The correct answer is b.

When a periodic payment (or contractural) plan company is organized as a spread-load company, it may take sales charges of 20% on any deposit, but may not exceed an average of 16% over the first 4 years. 48 deposits × $100 = $4,800 × 16% = $768.