Which One of the Following Statements Is Correct Concerning an Open-End

question 21

Multiple Choice

Which one of the following statements is correct concerning an open-end mutual fund which charges a front-end load?

• A)The number of shares outstanding was fixed at the time the fund was created.
• B)If an investor wishes to sell her shares, she must do so by selling to another investor.
• C)The NAV exceeds the offering price.
• D)The load is expressed as a percentage of the NAV.
• E)Investors receive the NAV when shares are sold.

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Definitions:

Volume Maximization

A pricing objective that involves setting prices low to encourage a greater volume of purchases; also called penetration pricing.

Penetration Pricing

A pricing strategy aimed at entering a new market by setting a low price initially to attract customers and gain market share.

Escalator Clause

A section in a contract that provides for price increases if certain, specified conditions occur.

Loss-leader Pricing

A pricing strategy where a product is sold at a loss to attract customers, with the expectation they will make additional purchases of other items at regular prices.