SIE practice questionmediumClosed-end Funds - Trading
If a closed-end fund is trading below its NAV, this means:
- AIt is in violation of SEC rules
- BIt is being redeemed by the sponsor
- CIt is closed for new investments
- DIts market price is less than the underlying portfolio value per share✓ Correct answer
Explanation
Why D — Its market price is less than the underlying portfolio value per share
Closed-end funds can trade at a premium or discount to NAV. B, C, and D do not describe this common market phenomenon.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Related Investment Companies & Packaged Products questions
- A client wants to minimize upfront sales charges and is willing to pay higher ongoing expenses. Which mutual fund class…
- Unlike mutual funds, ETFs maintain price alignment with underlying assets primarily through:
- ETFs are often considered more tax-efficient than mutual funds due to:
- Which feature differentiates a variable annuity’s payout phase from its accumulation phase?