SIE practice questioneasyMutual Funds — Redemption
An investor redeems shares of an open-end mutual fund. The redemption price is based on:
- AThe NAV from the previous trading day
- BThe next calculated NAV after the order is received (forward pricing)✓ Correct answer
- CThe market price at the time the order is placed
- DThe original purchase price of the shares
Explanation
Why B — The next calculated NAV after the order is received (forward pricing)
Open-end mutual funds use forward pricing — redemptions (and purchases) are executed at the next NAV calculated after the order is received. NAV is typically calculated at 4:00 PM ET each business day. Orders received before the cutoff get that day's NAV; orders received after get the next day's NAV. This ensures all investors transact at the same fair price.
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