Closed-End Investment Companies

Close-End Price Quote: When looking at a price quote for a closed-end fund, the last column is the

"% difference". This indicated that today's closing price is X% higher or lower than the previous day's closing price.

Both open-end & close-end investment companies share all of the following characteristics EXCEPT: I. Professional management II. each operates as a single account III. diversification of investment IV. shares are redeemable

Answer: Shares are redeemable. Explanation: Open-end investments company (mutual fund) shares are redeemable. Closed-end investment company shares are not redeemable. They must be sold in the open market like stock.

Which of the following statements BEST describes when a mutual funds NAV change? I. When fund shares are redeemed II. When funds shares are exchanged for another portfolio under the same family III. When fund shares are purchased IV. When the value of the securities in the funds portfolio changes

Answer: When the value of the securities in the funds portfolio changes Explanation: The Net Asset Value of a fund is calculated by taking the closing market value of all securities in the portfolio plus other assets and cash, minus liabilities and dividing that number by the total number of shares outstand=;.

For an open-end investment company [mutual fund], the redemption price is: I. equal to the public offering price of shares II. equal to the NAV III. equal to NAV + a load IV. determined by supply & demand

Answer: equal to the NAV Explanation: The redemption price on a mutual fund is equal to the net asset value of the fund shares.

Both Open-End & Closed End companies are subject to

Mkt risk.

NAV

Net Asset Value

Whenever the NAV per share of a fund is greater than the ASK, the fund must be

a closed-end fund.

Closed-end funds do not charge sales load because only

commissions are charged. Because the close-end funds trade like stock & trade with a commission.

Closed End Companies may issue

common stock, preferred stock and bonds & all of the above may be listed on an Exchange.

The Capitalization on an Open End Fund is

constantly changing.

The Capitalization on an Closed End Fund is

fixed.

Closed end Investment Companies have a Fixed Capitalization which do an IPO

means a fixed number of shares are issued.

An Open-End if a fund trades with a sales load or if a fund is a no load then those are shares of an

open-end company.

Closed-End Investment Companies do not issue

redeemable shares. Shares trade on an exchange or OTC based on supply & demand in the Mkt place.

NAV of a closed end fund [Closed-End Investment Company] does not necessarily [directly] relate to the BID & the ASK and

the BID & ASK may be higher or lower than the NAV because the shares of closed end fund are publicly traded.

The major difference between Close-end & Open-End funds is

the Capitalization.

Closed-end Investments do an (initial public offering) and then

the shares trade in the Secondary Mkt.