The share price of a closed-end fund differs from the net asset value such that additional ___ and potential return are presented to the investors.

Question

Quizplus · Accepted Answer

The share price of a closed-end fund can differ from its net asset value (NAV) due to market demand and supply dynamics, introducing additional sources of risk and potential return for investors. Unlike open-end funds, where shares are bought and sold at NAV, closed-end fund shares trade on an exchange at market prices that can be above (premium) or below (discount) the NAV, thus adding a layer of risk and opportunity for investors.

The Share Price of a Closed-End Fund Differs from the Net