Which One of the Following Is True with Respect to Closed-End

question 83

Multiple Choice

Which one of the following is true with respect to closed-end funds?

• A) Shares are issued whenever an investor wants to purchase them.
• B) Most of the funds today are closed-end.
• C) Shares are traded on stock exchanges similar to stocks.
• D) Shares always trade at NAV.
• E) Investors redeem their shares by selling them directly to the fund.

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Definitions:

Operating Leverage

The degree to which a firm or project can increase operating income by increasing revenue, reflecting the fixed versus variable cost structure.

Clockworks Co.

A hypothetical or generic name that could be used to refer to a company specializing in mechanical devices, especially those involving gears and timekeeping mechanisms.

Contribution Margin Ratio

The ratio that indicates the percentage of each sale that exceeds the variable costs, calculated by subtracting variable costs from sales revenue and dividing by sales revenue.

Fixed Costs

Fixed costs are business expenses that do not change with the level of goods or services produced, such as rent, salaries, and insurance premiums, providing stability in business planning.