SIE practice questionhardInvestment Company Act - Closed-End Funds
A closed-end fund differs from a mutual fund in which key way?
- AClosed-end funds cannot pay dividends
- BClosed-end funds issue and redeem shares at NAV
- CClosed-end funds may not invest in equities
- DClosed-end fund shares trade in the secondary market after the initial public offering✓ Correct answer
Explanation
Why D — Closed-end fund shares trade in the secondary market after the initial public offering
Closed-end funds issue a set number of shares that then trade on an exchange. Mutual funds redeem at NAV. Closed-end funds can invest in equities and may pay dividends.
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