Two Questions

  1. Don’t close end country funds generally trade at a premium to NAV? Schweser answer says that the generally trade at a discount?! 2. Aren’t order-driven markets highly automated? Are price driven markets automated too? I was of the opinion that price driven markets are NOT automated, compared to order driven markets. Your inputs will be valued. Thanks.
  1. Stalla says a premium is common when foreign investors use closed end funds. However they go on to say that country funds in devoloped markets are often more volatile than the underlying securities. If that is true then the funds would trade at a discount. Also if there was low liquidity or high management fees this would cause a discount. If there was a star manager manging the fund then that would command a premium. So I suppose it is on a case by case basis.