Products & Their RisksQuestion 69 of 398
Shares of a closed-end investment company:
a.Trade on an exchange and may sell at a premium or discount to net asset value
b.Are always bought and sold at net asset value plus a sales load
c.Are redeemed directly by the fund at net asset value on demand
d.Represent a fixed, unmanaged portfolio that self-liquidates
Explanation
A closed-end fund issues a fixed number of shares in an IPO, after which the shares trade on an exchange or over the counter. Their market price is set by supply and demand and can be above (a premium) or below (a discount) the fund's net asset value, unlike open-end fund shares that transact at NAV.
Law Reference: Investment Company Act of 1940Practice all 398 questions free — no signup required.
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