Series 7 Exam Question 400: Answer and Explanation

Question: 400

Which of the following are true about closed-end funds?

I. They may only issue common stock.

II. They are generally listed on an exchange.

III. They have a fixed number of shares outstanding.

IV. They are redeemable.

• A. II and III
• B. I and IV
• C. I, III, and VI
• D. II, III, and IV

Correct Answer: A

Explanation:

A. Closed-end funds are typically listed on an exchange and have a fixed number of shares outstanding. Closed-end funds must be sold to another investor and are not redeemable. In addition, closed-end funds may issue common stock, preferred stock, and bonds.