Investment Planning | Lesson 7: Investment Companies

Question 1

All of the following statements regarding closed-end funds are true except?

a) They trade at a premium or discount to NAV.
b) Shares trade on an exchange.
c) They have an unlimited initial market capitalization.
d) They are traded with the help of a broker.

Answer 1

Answer: C
Closed-end funds have a limited initial market capitalization. Once the shares are initially sold, no additional shares are sold to the public.