SIE Exam Question 312: Answer and Explanation

Question: 312

With regard to the price of closed-end fund shares held by investors which of the following statements is TRUE?

• A. Shares are sold at a discount when the securities in the fund have increased in value relative to their NAV
• B. Shares are sold at the price calculated at the close of business on that day
• C. Shares may be sold at a discount or premium to their NAV
• D. The price is set by formula each business day

Correct Answer: C

Explanation:

C - Closed-end company shares trade in the secondary market on exchanges. Their prices are determined by market supply and demand and therefore may be priced at a premium or discount to their NAV.