IFIC Mutual Funds Licensing Practice Exam · Question
Which of the following statements is true regarding open-end mutual funds?
Open-end mutual funds continuously issue and redeem units directly with investors, meaning the number of outstanding units fluctuates. Their price is based on t
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Question: Which of the following statements is true regarding open-end mutual funds?
Answer options: ✅ Units are continuously issued and redeemed directly by the fund company.
- Units trade on an exchange with prices determined by supply and demand.
- They typically have a fixed number of units outstanding.
- Investors can only buy units during an initial public offering (IPO).
Correct answer: Units are continuously issued and redeemed directly by the fund company.
Explanation: Open-end mutual funds continuously issue and redeem units directly with investors, meaning the number of outstanding units fluctuates. Their price is based on the fund's Net Asset Value (NAV).
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