FRM Part I · FRM Exam Part I · Fund Management
Which feature distinguishes an open-end mutual fund from a closed-end fund?
An open-end fund issues and redeems shares directly with investors at NAV, so its share count changes with inflows and outflows. Closed-end funds have a fixed share count and trade at premiums or discounts.
- AOpen-end funds issue and redeem shares at NAV with the fund itself, so share count varies with flowsCorrect
- BOpen-end funds trade at premiums and discounts to NAV on exchanges
- COpen-end funds have a fixed number of shares after the initial offering
- DOpen-end funds cannot hold illiquid assets at all
Explanation
Open-end funds create and redeem shares at end-of-day NAV, so share count changes with flows. Premiums and discounts and a fixed share count describe closed-end funds.
Did you get it right without looking?
One question tells you little. A timed set on Fund Management shows your real accuracy, how long you take and where you lose marks.
More Fund Management questions
- Which feature best describes the J-curve effect in private equity fund returns?
- A buyout fund has a 2% annual management fee on committed capital and 20% carried interest over an 8% hurdle with no catch-up. An LP committ…
- A fund of hedge funds invests $100 million in underlying funds that earn a combined gross return of 12% before any fees at the underlying le…
- An open-end mutual fund has total assets of $252 million and liabilities of $12 million. It has 8 million shares outstanding. What is the NA…
- A private equity fund is structured as a limited partnership. Which statement best describes the roles of the general partner (GP) and limit…
- A private equity GP is entitled to carried interest, and the fund agreement includes a clawback provision. Which situation does the clawback…