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Ch.2 · Advantages and Limitations of Mutual Funds · easy

What is a close-ended mutual fund?

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EXPLANATION

A close-ended fund issues a fixed number of units during the NFO period and has a defined maturity date. After the NFO, units cannot be directly purchased from or redeemed with the AMC — investors can buy/sell units on stock exchanges where they are mandatorily listed.

A.A fund that is closed to new investors after 1 year of launch

B.A fund that issues a fixed number of units during NFO and has a defined maturity period [✓ Correct]

C.A fund that only allows institutional investors to invest

D.A fund that can only be redeemed after the investor reaches 60 years of age

EXPLANATION

A close-ended fund issues a fixed number of units during the NFO period and has a defined maturity date. After the NFO, units cannot be directly purchased from or redeemed with the AMC — investors can buy/sell units on stock exchanges where they are mandatorily listed.

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