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Portfolios 404: Closed-End Funds

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1.
Using your securities as collateral to buy more shares is called _______.
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Leveraging. You must put up your own securities as protection for the leveraging.
2.
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.
3.
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.
4.
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.
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.
When a discount begins to shrink, an investor is likely to lose money.
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False. An investor can make money if he or she bought it at discount and the discount shrinks.
7.
The prices of closed-end fund shares are mostly determined by _______.
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Supply and demand. Closed-end fund share prices are determined mostly by supply and demand for the funds themselves.