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Portfolios 404: Closed-End Funds

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1.
Exchange-traded funds are a low-cost way to _______.
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Trade the market. This is one of their popular features.
2.
Many closed-end funds have low volatility.
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False. Many closed-end funds have high volatility. It is common in these funds.
3.
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.
4.
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.
5.
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.
6.
The portfolio value of a closed-end fund share is measured by its market price.
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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).
7.
Placing a market order tells your broker to buy shares only at a specific price or better.
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False. A limit order tells your broker to buy shares only at a specific price or better.