I could use a bit of clearing up in regards to NAV and POP.
I was a bit confused because I thought this chapter had covered that when a customer purchases a front-end loaded fund, there was a sales charge applied at purchase. Wouldn’t this mean that the purchase price is at the POP? I’ve included a snip of one part of the chapter stating the NAV is the general purchase price, but that the POP is the price of a customer’s purchase if it is loaded.
Thanks for the help.
Hi @Dj1! Thanks for sending this question our way.
The problem you’re running into is perspective, not your understanding. Many times, Series 7 exam questions can feel quite vague, and this question is meant to mimic the same tone on the actual exam. Question is - who is selling here? Is it the customer, or is it a financial firm (that’s part of the selling group)?
Generally speaking, most questions involving transactions are built around the perspective of the customer / investor. And that’s the case here. If an investor is selling a front-end loaded fund, you can assume they purchased the fund in the past with a sales charge (bought the fund at the POP). They’re now selling those shares, and will sell them at that day’s closing NAV.
If it were from the perspective of a brokerage firm selling the fund to a customer (meaning the customer was buying those shares), they would be sold at the POP. Again, it’s all perspective.
Bottom line - if a transaction-based question is vague in nature, assume it’s from the perspective of the customer. When an investor sells a front-end loaded fund, they’ve already paid the sales charge (during the purchase). Therefore, they’ll sell the shares at the NAV without any additional cost or charge.
I hope this makes sense! Please respond or DM me directly if you have any more questions.
Makes perfect sense. Thanks for the explanation! 
