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1.
A closed-end fund invests in a fixed number of securities.
False. A closed-end fund issues a fixed number of shares, but the portfolio is managed and not fixed.
2.
Using your securities as collateral to buy more shares is called _______.
Leveraging. You must put up your own securities as protection for the leveraging.
3.
Diversified funds usually reflect a particular investment philosophy.
True. For example, they may reflect balance, or they may reflect diversity within a narrow objective.
4.
Closed-end funds can, if they wish, repurchase shares from investors.
True. This is called a tender offer.
5.
The portfolio value of a closed-end fund share is measured by its market price.
False. The portfolio value of a closed-end fund share is measured by its net asset value. Market price reflects what you have to pay to purchase a share of a closed-end fund (plus or minus a brokerage commission).
6.
You can buy exchange-traded funds from a _______.
Broker anytime during the trading day. Investors must buy and sell their shares through a broker on the open market any time during the trading day.
7.
Closed-end funds tend to have higher commissions than regular mutual funds.
True. This is because the shares are fixed and can be bought only through the secondary market, unless they are new issues.
