Series 7 practice questioneasyPackaged Securities 178
A closed-end fund is most similar to a common stock because it:
- Ais always redeemed by the issuer at NAV
- Bmust maintain a fixed dividend
- Ccannot be purchased on margin
- Dtrades in the secondary market at a market price✓ Correct answer
Explanation
Why D — trades in the secondary market at a market price
Closed-end funds issue a fixed number of shares and trade on exchanges. As a result, market price may be above or below net asset value.
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