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.
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