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Portfolios 404: Closed-End Funds

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1.
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.
2.
Exchange-traded funds were first introduced in 1993 by the _______.
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American Stock Exchange. They were introduced in 1993 by the American Stock Exchange (AMEX).
3.
The most expensive type of broker is a full-service broker.
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True. A full-service broker charges the highest commissions.
4.
Closed-end funds can, if they wish, repurchase shares from investors.
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True. This is called a tender offer.
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.
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.
7.
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.