Andrew wants to make a withdrawal from his mutual fund, but he can't decide if he should sell the closedend or openend fund. Andrew should sell the closedend fund since he wouldn't have to wait for the NAVPS to be determined.

Question

Andrew wants to make a withdrawal from his mutual fund, but he can't decide if he should sell the closed­end or open­end fund. Andrew should sell the closed­end fund since he wouldn't have to wait for the NAVPS to be determined.

Quizplus · Accepted Answer

Closed-end funds trade on an exchange and are priced based on supply and demand from other investors, whereas open-end funds are priced based on the net asset value per share (NAVPS) at the end of the trading day. Therefore, Andrew wouldn't have to wait for the NAVPS to be determined if he sells a closed-end fund, making it a quicker and more convenient option.

Andrew Wants to Make a Withdrawal from His Mutual Fund