Which of the following statements is true?
A)Closed-end funds issue an unlimited number of shares as liabilities.
B)Open-end funds supply limited number of shares to investors.
C)Open-end funds need not stand ready to buy back previously issued shares from investors at the current market price for the fund's shares.
D)At a given market price, the supply of open-end fund shares is perfectly inelastic.
E)The number of outstanding shares of a closed-ended fund may change when the issuing fund chooses to repurchase them.

Question

Quizplus · Accepted Answer

The statement "The number of outstanding shares of a closed-ended fund may change when the issuing fund chooses to repurchase them" is true. Closed-end funds can issue a fixed number of shares and buy back those shares from investors at a later time, which can lead to a change in the number of outstanding shares. The other statements are false; for example, open-end funds do stand ready to buy back shares from investors at the current market price (i.e. they are redeemable), and the supply of fund shares can change depending on investor demand.

Which of the Following Statements Is True