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Portfolios 404: Closed-End Funds

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1.
Closed-end funds tend to have higher commissions than regular mutual funds.
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True. This is because the shares are fixed and can be bought only through the secondary market, unless they are new issues.
2.
The most expensive type of broker is a full-service broker.
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True. A full-service broker charges the highest commissions.
3.
Diversified funds usually reflect a particular investment philosophy.
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True. For example, they may reflect balance, or they may reflect diversity within a narrow objective.
4.
Giving existing shareholders the right to invest more capital into a closed-end fund in proportion to their existing ownership is called _______.
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A rights offering. Rights offerings let current shareholders buy additional stock.
5.
Exchange-traded funds are a low-cost way to _______.
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Trade the market. This is one of their popular features.
6.
Which of the following factors does not influence whether a closed-end fund share sells at a discount or premium?
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Diversity. Tax liability and low net asset value are both factors that determine whether a share sells at a discount or a premium.
7.
A closed-end fund invests in a fixed number of securities.
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False. A closed-end fund issues a fixed number of shares, but the portfolio is managed and not fixed.