The correct answer is A) Exchange Traded Funds, but the reason is not that of trading at NAV (see question 12 in 1st reading of PM: open-end funds trade closest to NAV). The textbook states the explanation as:
“ETF’s do not have capital gain distributions. If an investor sells shares of an ETF (or open-end mutual fund or closed-end mutual fund), the investor may have a capital gain or loss on the shares sold; however, the gain (or loss) from the sale is not a distribution.”
So does this mean that if the stocks’ values appreciate in the ETF, from say $100 to $150, the NAV of the ETF is still $100??? While for open-end and closed-end funds the NAV climbs to $150???