If a Closed-End Fund Share Sells at a Constant 20

question 13

Multiple Choice

If a closed-end fund share sells at a constant 20% discount, its dividend yield compared to a comparable open-end share will be

• A) the same.
• B) higher.
• C) higher or lower depending on NAV.
• D) lower.

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Definitions:

Money Demand

The desire to hold cash or liquid assets based on the trade-off between the liquidity provided by holding money and the foregone interest earnings from not investing it.

Financial Assets

Assets that derive value from contractual claims, such as stocks, bonds, bank deposits, and other investments.

Interest Rate

The percentage at which interest is paid by a borrower for the use of money they borrow from a lender.

Money Supply

The total amount of money available in an economy at a specific time, including cash, coins, and balances held in bank accounts.