IFIC Mutual Funds Licensing Practice Exam · Question
A closed-end fund with an NAV of $20.00 is trading on the TSX at $19.00 per share. This situation indicates that the fund is trading at a:
When a closed-end fund's market price per share is lower than its Net Asset Value (NAV) per share, it is said to be trading at a discount. In this case, $19.00
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Question: A closed-end fund with an NAV of $20.00 is trading on the TSX at $19.00 per share. This situation indicates that the fund is trading at a:
Answer options:
- Premium to NAV. ✅ Discount to NAV.
- Par with NAV.
- Zero-net basis.
Correct answer: Discount to NAV.
Explanation: When a closed-end fund's market price per share is lower than its Net Asset Value (NAV) per share, it is said to be trading at a discount. In this case, $19.00 is less than $20.00, representing a discount.
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