Which One of the Following Statements Regarding Closed-End Mutual Funds

question 42

Multiple Choice

Which one of the following statements regarding closed-end mutual funds is false

• A)The funds always trade at a discount from NAV.
• B)The funds redeem shares at their net asset value.
• C)The funds offer investors professional management.
• D)The funds always trade at a discount from NAV and redeem shares at their net asset value.
• E)None of the options

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Definitions:

Market Risk Premium

Market Risk Premium is the additional return an investor expects from holding a risky market portfolio instead of risk-free assets.

Risk-free Rate of Return

The anticipated profit from a riskless investment, usually tied to government treasuries.

Annualized Rate

A projected rate of return or growth over a period of one year, taking into account the effect of compounding over that period.

Beta Coefficient

The beta coefficient measures a stock's volatility in comparison to the overall market, indicating how much the stock price is likely to change relative to market movements.