Open-Ended Funds: Key Features and Pricing | CFA Level 1 Exam Prep

Open-Ended Funds: Features and Pricing

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Question

Which of the following is/are true about open-ended funds?

I. The redemption price equals the NAV in the absence of a redemption charge.

II. The load charge, if any, typically is a constant percentage of the amount invested.

III. The NAV of a no-load fund equals its purchase price.

Answers

Explanations

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A. B. C. D. E. F.

B

The offer price i.e. the price at which you can buy a share equals

NAV/(1-load charge) while the redemption price, in the absence of a redemption fee, equals the NAV. The load charge, if any, typically declines as the size of the order increases.

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