Series 7 practice questioneasyPackaged Products — Mutual Funds
What is the primary difference between an open-end mutual fund and a closed-end fund?
- AOpen-end funds trade on exchanges; closed-end funds do not
- BOpen-end funds charge higher management fees than closed-end funds
- CClosed-end funds always trade at a premium to NAV
- DOpen-end funds continuously issue and redeem shares at NAV; closed-end funds have a fixed number of shares that trade on exchanges✓ Correct answer
Explanation
Why D — Open-end funds continuously issue and redeem shares at NAV; closed-end funds have a fixed number of shares that trade on exchanges
Open-end mutual funds continuously issue and redeem shares directly with investors at the fund's net asset value (NAV). Closed-end funds issue a fixed number of shares through an IPO, and those shares then trade on secondary markets, where they may trade at a premium or discount to NAV.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 758+ Series 7 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Investment Information & Recommendations questions
- How is a mutual fund's net asset value (NAV) calculated?
- An investor buys 100 shares of XYZ at $50, writes 1 XYZ Jun 55 call at $3, and buys 1 XYZ Jun 45 put at $2. If XYZ…
- A mutual fund has total assets of $500 million, total liabilities of $10 million, and 20 million shares outstanding.…
- When an option expires unexercised, the writer recognizes the premium as:
- Which share class of mutual fund typically charges a front-end sales load?
- An investor buys 1 RST May 25 call at $5 and writes 1 RST May 35 call at $2. If RST closes at $32 at expiration, what…
- A client invests $100,000 in Class A shares with a 5% front-end load. How much is actually invested in the fund?
- Which statement is TRUE regarding LEAPS options?