"An open-end fund's NAV is determined continuously throughout the trading day." Explain why you agree or disagree with this statement
What will be an ideal response?
While they may trade continuously throughout the day, open-end funds are portfolios whose NAV or price is determined only once each day, at the close of the day. Thus, while you would agree that they are bought and sold continuous throughout the day, the price does not continuously change during the day as is the case for closed-ends fund and ETFs that can experience intraday pricing or change in NAV or price throughout the day.Unlike a closed-end fund wherein its market price can trade at a significant discount from the NAV, the creation and redemption process for an ETF provides a mechanism for an ETF's market price to trade very close to its NAV.
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