SIE practice questionmediumClosed-End Funds
Which of these is true regarding shares of a closed-end investment company?
- AThey are continuously issued and redeemed by the fund at NAV
- BThey are typically bought and sold in the secondary market at market prices✓ Correct answer
- CThey are not regulated under the Investment Company Act of 1940
- DThey can only be sold to accredited investors
Explanation
Why B — They are typically bought and sold in the secondary market at market prices
Closed-end fund shares trade in the secondary market at market prices, sometimes above or below NAV. Mutual funds (not closed-end) continuously issue and redeem at NAV. All investment companies are regulated by the Act. Closed-end funds are available to general investors.
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
- Which investment product is regulated by the Investment Company Act of 1940?
- A unit investment trust (UIT) differs from a mutual fund because a UIT:
- A broker recommends high-yield bonds to a conservative investor. Which rule does this potentially violate?
- A registered representative recommends a high-risk product to a conservative investor. Which rule is most likely…