A discount on a closed-end fund can increase its investment return.

Question

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When a closed-end fund trades at a discount, an investor can acquire the fund's assets for less than their actual value. As a result, the investor can potentially realize a higher investment return when the discount narrows or the fund's assets appreciate in value. However, it should be noted that closed-end funds are subject to market risk and there is no guarantee that their prices will rise or that the discount will narrow.

A Discount on a Closed-End Fund Can Increase Its Investment