can some one go over the main difference between open end and closed end trading?
I think the main difference is that the closed end fund may trade at a discount or premium to its NAV (net asset value), while the open end fund always trades at its NAV.
Biggest difference is that an open ended fund stands ready to redeem shares or create new shares. A closed end fund is really fundamentally much more stock-like.
This is an area that I am very weak in, I would also like to hear people’s feedback. The only thing that I understand is that one option can be sold directly in the secondary market while the other isn’t able to. I know there are some points in there about how NAV is calculated as well as the ‘in kind’ creation and redemption of shares, however, I never fully understood these concepts as much as I would have liked to.
somewhere i read and i came across that the main difference is capitalization - does anyone know anything about this?
draw a char CEF ----- OEF a) trades continuoulsy ---------- trades once b) off from NAV due to supply demand --------------- trades at NAV + charges c) intial IPO qty shares ----------- redeeems on a daily basis d) low transaction costs ----------- high transaction costs Those are the ones i remember but this is NOT IMPORTANT for exam. DO FSA. FOCUS ON FSA!!