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Portfolios 404: Closed-End Funds

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1.
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.
2.
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.
3.
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.
4.
You can buy exchange-traded funds from a _______.
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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.
5.
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.
6.
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.
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.