Scenario 60: Which of the following is a primary characteristic of an open-end mutual fund?

Question: Scenario 60: Which of the following is a primary characteristic of an open-end mutual fund?

Answer options: ✅ Shares are bought directly from and sold back to the fund company.

• Shares trade on an exchange like stocks.
• The number of outstanding units is fixed.
• It generally does not issue a prospectus.

Correct answer: Shares are bought directly from and sold back to the fund company.

Explanation: Open-end mutual funds continually issue and redeem units, meaning investors transact directly with the fund company at the Net Asset Value (NAV) per unit. This distinguishes them from closed-end funds and exchange-traded funds (ETFs). The correct answer is "Shares are bought directly from and sold back to the fund company.". This capacity-fill scenario 60 reinforces the same competency for the ific bank and follows the certified explanation standard.