Which term describes a fund with an unlimited number of units issued and unit value determined by the NAV of its portfolio?

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Multiple Choice

Which term describes a fund with an unlimited number of units issued and unit value determined by the NAV of its portfolio?

Mutual funds are open-end structures, able to issue an unlimited number of units. The price per unit is tied to the fund’s net asset value (NAV) per unit, calculated by dividing the fund’s total assets minus liabilities by the number of units outstanding. Investors buy and redeem shares with the fund at NAV (often plus or minus any sales or redemption charges), so the unit count can grow without limit as more investors put money in. This setup contrasts with a closed-end fund, which has a fixed number of shares traded on an exchange and priced by supply and demand rather than NAV; a unit investment trust has a fixed portfolio and usually a defined termination. So the term that fits is mutual fund.

Mutual funds are open-end structures, able to issue an unlimited number of units. The price per unit is tied to the fund’s net asset value (NAV) per unit, calculated by dividing the fund’s total assets minus liabilities by the number of units outstanding. Investors buy and redeem shares with the fund at NAV (often plus or minus any sales or redemption charges), so the unit count can grow without limit as more investors put money in. This setup contrasts with a closed-end fund, which has a fixed number of shares traded on an exchange and priced by supply and demand rather than NAV; a unit investment trust has a fixed portfolio and usually a defined termination. So the term that fits is mutual fund.

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