SIE practice questionhardClosed-End Funds
Which risk is unique to investors in closed-end funds, compared to open-end mutual funds?
- AMarket price may diverge from the fund's NAV✓ Correct answer
- BIssuer insolvency risk
- CLiquidation at NAV is guaranteed
- DInability to access professional management
Explanation
Why A — Market price may diverge from the fund's NAV
Closed-end fund shares may trade at prices above or below NAV, unlike open-end funds redeemed at NAV. Professional management exists for both, and liquidation at NAV is not guaranteed for closed-end funds.
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