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Which of the following is a characteristic of a mutual fund?
Suggested Answer: B
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Mutual fund shares are bought and sold through the fund itself. The shares will sell for at least net asset value, unlike shares of a closed-end investment company wherein prices are set by supply and demand forces. Mutual funds are open-end investment companies and have no fixed number of shares.
30 comments · newest first
KA
Kallie
7 months ago
D is misleading too. Funds can issue more shares as needed.
AR
Arminda
7 months ago
True, but that's not a defining characteristic. B is clearer.
RO
Roy
7 months ago
I feel like A could be tricky. Selling below NAV happens sometimes.
GW
Gwen
7 months ago
Agreed! B makes sense. It's how mutual funds operate.
WI
Willow
7 months ago
Totally agree, B is the way mutual funds work!
SA
Sanjuana
8 months ago
D seems off, aren't mutual funds usually open-ended?
BL
Blondell
8 months ago
I thought shares were always sold on exchanges?
CO
Cordelia
8 months ago
A can happen, but it's not common.
NO
Noe
9 months ago
B is correct, shares are bought and sold through the fund.
KA
Kanisha
9 months ago
Mutual funds are like a box of chocolates - you never know what you're gonna get! B) is the way to go.
NG
Ngoc
9 months ago
D) the fund has a fixed number of shares that can be sold. Hmm, that doesn't sound right to me.
RA
Rasheeda
9 months ago
This is an easy one! B) is the correct answer.
LA
Lavera
9 months ago
A) shares may sell below net asset value. Happens when the market is down, but the fund still has value.
LO
Louvenia
9 months ago
B) shares are bought and sold through the fund. That's the classic mutual fund model.
JE
Jean
10 months ago
I practiced a question similar to this, and I think mutual funds can issue and redeem shares as needed, so D seems off too.
BR
Brice
10 months ago
I recall that mutual funds don't trade on exchanges like stocks do, so I think C is definitely not right.
TA
Tawanna
10 months ago
I'm not entirely sure, but I feel like I saw a question about mutual funds where it mentioned something about shares being sold below net asset value. Could that be A?
MI
Millie
10 months ago
This is a good test of my understanding of mutual funds. I'll review what I know about how they operate and see which option best fits that description.
SI
Sina
10 months ago
I'm pretty confident I know the answer to this one. Mutual funds are bought and sold directly through the fund, not on an exchange. That rules out a few of these options right away.
LE
Leatha
10 months ago
I think I remember that mutual fund shares are typically bought and sold through the fund itself, so maybe option B is correct?
JE
Jerry
11 months ago
I think B is the right answer. Shares are bought and sold through the fund.
HI
Hillary
11 months ago
C is definitely wrong. Mutual funds aren't traded on exchanges.
LU
Lucia
11 months ago
Okay, I've got a strategy for this. I'll focus on the key differences between mutual funds and other investment products. That should help me identify the right characteristic.
KA
Karina
11 months ago
Hmm, I'm a bit unsure about this one. I know mutual funds have some unique features, but I'm not totally clear on the differences between these options. I'll have to think it through carefully.
KE
Kerry
12 months ago
This seems like a straightforward question about mutual fund characteristics. I'll start by eliminating the options that don't sound right, then focus on the remaining ones.
AI
Ailene
6 months ago
D is tricky, but I’d go with B too.
RU
Ruth
6 months ago
C is also wrong. They don’t sell on exchange floors.
LE
Lemuel
6 months ago
B sounds correct. Shares are bought through the fund.
PA
Patria
7 months ago
Agreed, A doesn’t fit.
ES
Estrella
11 months ago
I think A is definitely not right.