SIE practice questioneasyOpen-End Mutual Funds
Which of the following most accurately describes the pricing of shares in an open-end mutual fund?
- AShares are bought and sold directly between investors.
- BShares are traded at market prices that fluctuate throughout the day.
- CShares are only purchased at the offering price set at the beginning of the year.
- DShares are purchased and redeemed at the fund’s net asset value (NAV) per share.✓ Correct answer
Explanation
Why D — Shares are purchased and redeemed at the fund’s net asset value (NAV) per share.
Open-end mutual fund shares are bought and redeemed with the fund itself at the next calculated NAV per share. Closed-end fund shares trade between investors at market prices (B, D), and there is no fixed annual offering price (C).
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