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Portfolios 404: Closed-End Funds

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1.
Placing a market order tells your broker to buy shares only at a specific price or better.
Choose wisely. There is only one correct answer.
False. A limit order tells your broker to buy shares only at a specific price or better.
2.
Which type of mutual fund invests in securities from developing nations?
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Emerging markets fund. Emerging markets funds invest in securities from developing nations.
3.
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.
4.
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.
5.
Which of the following is true of a closed-end fund but not of an open-ended mutual fund?
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Stable cash flow. Unlike mutual funds, no assets are flowing into or out of a closed-end fund.
6.
Exchange-traded funds are a low-cost way to _______.
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Trade the market. This is one of their popular features.
7.
Leveraging a closed-end fund could increase the amount of capital in it. Which of the following is not a way to leverage a closed-end fund?
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Secondary share offering. Leverage is done through issuing debt or preferred shares.