Series 7 - General Securities Representative Exam

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Which of the following statements are TRUE of open-end funds and closed-end funds?

Closed-end funds have a limited number of shares available for trading. Open-end funds has no limit on the number of shares it can issue and Open-end funds typically have higher expense ratios than closed-end funds
A
Closed-end funds have a limited number of shares available for trading. Open-end funds has no limit on the number of shares it can issue, Open-end funds typically have higher expense ratios than closed-end funds, Open-end funds do not trade at the NAV, while closed-end funds do
B
Open-end funds typically have higher expense ratios than closed-end funds and Closed-end funds typically have higher expense ratios than open-end funds
C
Open-end funds typically have higher expense ratios than closed-end funds and Open-end funds do not trade at the NAV, while closed-end funds do
D

Explanations

Closed-end funds have a limited number of shares available for trading and can trade at a premium or discount to the NAV. Open-end funds like mutual funds trade at the NAV and usually have higher expense ratios as they are actively managed

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