SIE practice questionmediumClosed-End Funds
Closed-end funds may trade at a premium or discount to NAV because:
- ATheir portfolios are fixed and not traded
- BIssuers set a fixed share price after the IPO
- CAll redemptions occur at NAV
- DMarket prices are determined by supply and demand on exchanges✓ Correct answer
Explanation
Why D — Market prices are determined by supply and demand on exchanges
Closed-end funds trade on exchanges, so prices reflect supply and demand, potentially differing from NAV. Share price is not fixed (B), and redemptions occur through trading, not at NAV (C, D).
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