Politeknik Chapter 7

1. Open-End Fund
Investors buy and sell shares directly with the mutual fund company without a secondary market
Have an unlimited number of shares
Purchase and selling price is determined by the Net Asset Value (NAV) of the fund
All purchases and sales are completed at the end of the day after the stock markets have closed
Close-end fund
Sell only the initial offering
Subsequent trades are done in a secondary market, similar to the common stock market
Have a limited number of shares
Investment advisor doesn’t have to worry about cash inflow or outflows
Purchase and selling price is determined by supply
and demand
Generally sell at premium or discount (usually discount)
to NAV