Question

S.I.D. Asset Management initiated an open-end and a closed-end mutual fund a few years ago. If you want to invest in the funds today, you:________
a. Must purchase shares of each fund in the secondary (stock) market.
b. May purchase shares of each fund in either the primary (from the investment company) market or the secondary (stock) market.
c. Must purchase shares of the open-end fund in the secondary (stock) market, and shares of the closed-end fund in the primary (from the investment company) market.
d. Must purchase shares of the open-end fund in the primary (from the investment company) market, and shares of the closed-end fund in the secondary (stock) market

Answer 1

Answer:

c. Must purchase shares of the open-end fund in the secondary (stock) market, and shares of the closed-end fund in the primary (from the investment company) market.

Explanation:

An open-ended shares are those whose funds are sold by a funds company to the public investors. It is similar to mutual funds unlike the close-ended fund which has a limited or fixed number of shares which is usually offered to the public through the the IPO (Initial Public Offer).

For S.I.D Asset Management which initiated both the open-ended and close-ended funds, in other to purchase it few years later, the appropriate channel needs to be followed.