Question

Which of the following are sources of return for an open-end mutual fund? I.    dividend and...

Which of the following are sources of return for an open-end mutual fund?

I.    dividend and interest income

II.   change in the discount or premium

III. capital gains

IV. change in NAV

I and III only

I, II and III only

I, III and IV only

II, III and IV only
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Homework Answers

Answer #1

The sources of return for an open ended mutual fund are :

When the interest and dividend is earned on the fund.

The capital gains earned by selling the investments at a profit.

NAV per share increases. Net asset value is the market value of the fund's assets at the end of each trading day minus any liabilities divided by the number of outstanding shares.

So, the correct option is option III.

The closed end funds trade at a premium or discount as it's prices are determined by the supply and demand,As the demand is more, the price of the units trade at a premium. If the demand is low, it trades at a discount, as the market price will be lower than the NAV.

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