Two clients can own the same portfolio and end up thousands of dollars apart. One bought the wrong share class, missed a breakpoint or bought a tax bill in December.
A mutual fund, formally an open-end investment company, needs one fair price each day for everyone who buys or sells. That price is the net asset value (NAV) per share.
The public offering price (POP) is NAV plus any front-end sales charge. A share class with no front-end load sells at NAV.
Under Securities and Exchange Commission (SEC) Rule 22c-1, the daily NAV calculation happens at least once each business day. The fund's board sets the time, usually the 4:00 p.m. Eastern market close. Under forward pricing, every purchase and redemption gets the next NAV computed after the order arrives. An order received at 3:55 p.m. gets today's NAV. One received at 4:05 p.m. gets tomorrow's. No one can trade at a price already known.
Common mistakes
- Stale qualified client figures: The $1,100,000 managed and $2,200,000 net worth tests ended June 28, 2026. Use $1,400,000 or more than $2,700,000.
- Calling a 12b-1 fund no-load: A fund with no loads but a 0.35% 12b-1 fee fails the 0.25% test.
- Assuming Class C has no CDSC: Most charge 1% on first-year redemptions. Their 1% yearly fee also makes them costlier than A for long holds.
Bottom line
- NAV per share = (total assets − liabilities) ÷ shares outstanding; POP = NAV ÷ (1 − load %); load % = (POP − NAV) ÷ POP; forward pricing gives every order the next NAV computed (SEC Rule 22c-1).
- Class A (front load cut at breakpoints, low 12b-1) suits large, long holds, Class C (level 12b-1 up to 1%, 1% first-year CDSC) suits short holds, and Class B (declining CDSC) is rare.
- FINRA Rule 2341 caps loads at 8.5% (lower without rights of accumulation or quantity discounts, 7.25% with a service fee) and 12b-1 at 0.75% plus 0.25% service; "no-load" requires no loads and 12b-1 plus service fees of 0.25% or less.
- A letter of intent gives the breakpoint now for 13 months, with escrowed shares paying any shortfall; rights of accumulation count family holdings; failing to disclose either is a dishonest or unethical practice.
Exam shortcut
When a stem gives NAV and POP, subtract and divide by POP, never NAV. For share-class questions, read two facts: amount and holding period. Large and long points to A; a few years points to C. Treat any capital gain distribution as long-term without checking the holding period. For qualified clients, one prong is enough. For a shareholder vote, compute both prongs and pick the smaller.
The full lesson (about 3,763 words, 25 min read) adds 2 worked examples, all 5 common mistakes, a self-check, free in the app.
Learning objectives
- B13
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