Acustomer has signed a letter of intent to buy at least $50,000 of a mutual fund in return for getting a lowered sales charge. the customer has already invested $40,000, and the customer notices on his account statement that the current nav of the position is $52,000. the fund is going to make a distribution of the $12,000 capital gain. the registered representative recommends that the customer take the capital gain as cash and use the proceeds to buy shares of the fund to finish the breakpoint. this suggestion by the registered representative is inappropriate because it was not disclosed that:
a. the break point has already been completed by the asset appreciation in the account.
b. customers can only complete break points with money that is not obtained from mutual fund share liquidations.
c. the capital gain would be automatically re-invested at nav if not taken in cash while the purchase of the shares would occur at pop including a sales charge.
d. if the capital gain were automatically re-invested, there would be no tax due, but if the capital gain is taken in cash, it is taxable.