Front Fee

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Definition of 'Front Fee'

The option premium paid by an investor upon the initial purchase of a compound option. A compound option is one where the underlying asset is also an option (i.e. an option on an option). The front fee gives the investor the right - but not the obligation - to exercise the compound option. If exercised, another fee known as the "back fee" is payable for the underlying option.
Investopedia Says

Investopedia explains 'Front Fee'

Compound options are used in situations where uncertainty exists regarding the requirement for risk mitigation. For example, a company may submit a bid for an overseas project. If successful, the project would generate significant revenue in a foreign currency, which may need to be hedged against exchange rate risk. A compound option would be useful in this case, because the front fee payable would be lower than the premium payable on a foreign currency option contract (which is a contingent liability in any case).

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'Front Fee'

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    http://financialedge.investopedia.com/financial-edge/0911/Sep-8-Debt-Settlement-Arrangements-and-Your-Credit-Score.aspx
    ... These companies usually take an upfront fee if they are over the internet or in
    person, but cannot charge an up-front fee if they contact you or you contact ...

  • Mutual Funds: The Costs | Investopedia

    http://www.investopedia.com/university/mutualfunds/mutualfunds2.asp
    ... are still curious, here is how certain loads work: • Front-end loads - These are
    the most simple type of load: you pay the fee when you purchase the fund. ...

  • The ABCs Of Mutual Fund Classes

    http://www.investopedia.com/articles/mutualfund/05/shareclass.asp
    ... is $10,000. If you invest $15,000 to reach the breakpoint on the second
    installment, you'd receive a discounted front-load fee. ...

  • What's the difference between a load and no-load mutual fund?

    http://www.investopedia.com/ask/answers/125.asp
    ... redeem the mutual fund. A front-end load is the opposite of a back-end
    load and means the fee is charged up front. A no-load fund ...

  • What is financial double-dipping?

    http://www.investopedia.com/ask/answers/09/double-dipping.asp
    ... An example of double-dipping would be: An advisor purchases a front-end load mutual
    fund for a fee-based account that also will pay the advisor a hefty ...

  • Where do I look for fees that I am charged on investments? What ...

    http://www.investopedia.com/ask/answers/10/where-find-investment-fees.asp
    ... investment company passes this cost onto the investor by charging a load fee which
    is used to pay the brokers. There are two types of load fees: front-end load ...

  • Series 7 Study Guide - Packaged Securities - Mutual Fund ...

    http://www.investopedia.com/exam-guide/series-7/packaged-securities/mutual-fund-fee-breakpoint.asp
    ... Most funds have a sales fee and most of those prefer to get paid at the
    time of purchase; these are called front-end load funds. ...

  • How To Pick A Good Mutual Fund

    http://www.investopedia.com/articles/mutualfund/07/picktherightmutualfund.asp
    ... A front-end load/fee is paid out of the initial investment made by the investor
    while a back-end load/fee is charged when an investor sells his or her ...

  • A Guide To Investor Fees

    http://www.investopedia.com/articles/basics/11/investors-fees-cheat-sheet.asp
    ... If you do decide to purchase funds with a front-end fee, make sure that you research
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  • The Unique Advantages Of VA Mortgages

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    ... FHA mortgages require a fee similar to the VA loan's funding fee. It's called
    up-front mortgage insurance and it costs 2.25% of the loan amount as of May 2010. ...

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