A(n)________ fund must hold substantial cash reserves in order to meet fund redemptions from shareholders.

Question

Quizplus · Accepted Answer

An open-end mutual fund is designed to allow investors to buy and sell shares at any time, usually at the net asset value (NAV) per share. Therefore, the fund must hold substantial cash reserves in order to meet redemptions from shareholders. Closed-end funds do not allow for redemptions, but instead trade on an exchange. REITs, ETFs, and unit trusts may hold cash reserves but do not necessarily need to hold substantial amounts for the purpose of meeting redemptions.

A(n)________ Fund Must Hold Substantial Cash Reserves in Order to Meet