Load in Computing
Definition
In computing, the term “load” refers to the process of moving a program or data from secondary storage (such as a disk) to the computer’s primary memory (RAM). This process is essential for programs to be executed by the CPU, as they need to be located in the faster-access primary memory to function correctly.
Examples
- Loading an Operating System: When you turn on your computer, the operating system is loaded from the hard drive into the main memory.
- Running an Application: When you open a software application like Microsoft Word, it is loaded from the disk into the computer’s memory.
Load in Finance
Definition
In finance, a “load” refers to a sales charge or commission that investors pay when buying or selling shares of a mutual fund. Loads typically come in two main types: front-end loads and back-end loads.
Types of Loads
- Front-End Load: This is a commission or sales charge applied at the time of the initial purchase of fund shares. It usually amounts to about 8½% of the total investment.
- Back-End Load: Also known as a deferred sales charge, this is a fee paid when investors sell their fund shares. The fee often decreases over time the longer an investor holds onto the shares.
No-Load Fund
A no-load fund does not charge any sales fee when shares are bought or sold.
Examples
- Front-End Load: An investor pays a 5% front-end load on a $10,000 investment in a mutual fund, resulting in a $500 fee.
- Back-End Load: An investor sells shares in a mutual fund and pays a 2% back-end load on the proceeds.
Frequently Asked Questions
What is the difference between front-end load and back-end load?
A front-end load is a sales charge paid when purchasing shares of a mutual fund, while a back-end load is paid when selling shares of the fund.
Can I avoid paying loads on mutual funds?
Yes, you can invest in no-load funds, which do not charge sales fees when you buy or sell shares.
Why do mutual funds charge loads?
Loads are typically used to pay for the financial advice and services provided by the brokerage or financial advisor.
No-Load Fund
A mutual fund that does not charge any type of sales load.
Memory Management
The process of controlling and coordinating computer memory, including assigning blocks to various running programs to optimize system performance.
Mutual Fund
A type of investment vehicle consisting of a portfolio of stocks, bonds, or other securities, wherein investors can buy shares.
Online References
- Investopedia: Load Funds
- Wikipedia: Load (computing)
Suggested Books for Further Studies
- “Understanding Computers: Today and Tomorrow” by Deborah Morley and Charles S. Parker - Offers a comprehensive overview of how computer memory and loading processes work.
- “Mutual Funds For Dummies” by Eric Tyson - Provides detailed explanations of mutual fund types, fees, and investment strategies.
Fundamentals of Load: Computers and Finance Basics Quiz
### What does "load" refer to in computing?
- [ ] The process of printing documents.
- [x] Moving a program from disk to primary memory.
- [ ] Saving data to a hard drive.
- [ ] Shutting down a program.
> **Explanation:** In computing, "load" refers specifically to moving a program or data from the disk to the computer’s memory, allowing it to be executed by the CPU.
### What is a front-end load in mutual funds?
- [x] A sales charge at the time of purchase.
- [ ] A charge levied yearly.
- [ ] A performance fee.
- [ ] An exit fee at the time of sale.
> **Explanation:** A front-end load is a sales charge or commission fee paid by the investor at the time of purchasing mutual fund shares.
### What is a back-end load in mutual funds?
- [ ] A sales charge at the time of purchase.
- [x] A fee paid when selling shares.
- [ ] A management fee deducted annually.
- [ ] A fee for transferring funds between accounts.
> **Explanation:** A back-end load is a deferred sales charge paid by the investor when they sell their shares in the mutual fund.
### Can a no-load fund charge any sales fees?
- [ ] Yes, it can charge a small fee.
- [ ] Yes, but only on special transactions.
- [ ] Yes, but they are hidden in other costs.
- [x] No, it does not charge any sales fees.
> **Explanation:** A no-load fund does not charge any sales fees when investors buy or sell shares in the fund.
### Why do mutual funds charge loads?
- [ ] To penalize frequent traders.
- [ ] To discourage small investors.
- [x] To pay for financial advice and brokerage services.
- [ ] To cover the cost of fund management.
> **Explanation:** Loads are primarily used to compensate the brokerage or financial advisors for their services related to the fund.
### Which of the following is NOT true about a no-load fund?
- [ ] It does not charge a front-end load.
- [ ] It does not charge a back-end load.
- [ ] It may have a higher expense ratio.
- [x] It charges a fee for every transaction.
> **Explanation:** A no-load fund does not charge any transaction fees (neither front-end nor back-end load), but it may have other operational expenses.
### How can mutual fund investors avoid sales charges?
- [ ] By investing only in back-end load funds.
- [x] By investing in no-load funds.
- [ ] By holding onto their investments indefinitely.
- [ ] By using margin accounts.
> **Explanation:** Investors can avoid sales charges by choosing no-load mutual funds, which do not have any front-end or back-end load fees.
### Which type of load decreases as the holding period increases?
- [ ] Front-end load.
- [x] Back-end load.
- [ ] No-load.
- [ ] Level load.
> **Explanation:** The back-end load often decreases over time the longer an investor holds the shares in the mutual fund.
### What is required to execute a program in a computer?
- [x] The program must be loaded into the computer’s memory.
- [ ] The program must be saved on the desktop.
- [ ] The program must be printed.
- [ ] The program must be archived.
> **Explanation:** For a program to be executed, it must be moved from its storage location (disk) into the computer’s memory (RAM).
### Investments in mutual funds can be classified based on?
- [ ] The age of the fund manager.
- [ ] The geographical location of the investor.
- [x] The sales charges associated (front-end load, back-end load, no-load).
- [ ] The type of dividends declared.
> **Explanation:** Mutual funds can be classified based on the type of sales charges they impose, including front-end loads, back-end loads, and no-loads.
Thank you for exploring the intricate details of the term “Load” across computing and finance and for engaging with our specialized quiz. Keep enriching your knowledge base!
