A closed-end fund's appeal is enhanced if it
A)sells at a premium.
B)has a load.
C)does not have a load.
D)sells at a discount.

Question

Quizplus · Accepted Answer

A closed-end fund's appeal is enhanced if it sells at a discount, as investors can purchase the fund's shares at a lower price than the underlying assets' value. This provides the potential for higher returns in the future when the fund's shares trade closer to their net asset value. On the other hand, a premium would mean that the shares are trading at a higher price than their net asset value, potentially leading to lower returns for investors who purchase at that price. Load fees (front-end or back-end) are independent of the fund's market price and are paid to compensate the broker or financial advisor.

A Closed-End Fund's Appeal Is Enhanced If It