Why might an investor be interested in backdating a Letter of Intent?

An investor might be interested in backdating a Letter of Intent to increase breakpoint benefits. In mutual funds, breakpoints refer to the reduced sales charges that are available to investors who commit to investing a certain amount of money. By backdating the Letter of Intent, the investor can potentially qualify for a lower sales charge based on the total investment amount, which includes both the current investment and any future investments they may make within a designated period. This can be advantageous for investors looking to maximize their investment and minimize costs, as they benefit from lower fees due to the cumulative amount reaching a breakpoint threshold.

The other choices do not accurately capture the primary motivation related to backdating a Letter of Intent. Avoiding penalties and extending the validity of the investment may not directly relate to the financial incentives that those breakpoints offer. While aligning with a prior investment period could be relevant in some contexts, it’s less about the financial benefits and more about timing, which does not represent the main reason an investor would consider backdating for this purpose.