SIE practice questioneasyOpen-End Mutual Funds
Which of the following best describes the net asset value (NAV) of an open-end mutual fund?
- AThe maximum offering price plus any applicable sales charges
- BThe value at which new shares are issued to the public
- CThe price set by supply and demand on the secondary market
- DThe value per share determined by dividing the total assets minus liabilities by the number of shares outstanding✓ Correct answer
Explanation
Why D — The value per share determined by dividing the total assets minus liabilities by the number of shares outstanding
A is correct because the NAV equals assets minus liabilities, divided by shares outstanding. B is incorrect as new shares are issued at the NAV plus any sales charge. C describes how closed-end funds and ETFs are priced, not mutual funds. D is incorrect as maximum offering price includes the sales charge above NAV.
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