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If NAV > market price of a fund, then the fund ________
- Ais selling at a discount
- Bis selling at a premium
- Cis an index fund
- Dis an exchange traded fund
Correct answer: A
Discussion 1
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CCommunity
is selling at a discount
If the fund is traded at a price lower than the NAV, it is called “discount”. Similarly if the fund is traded at a price higher than the NAV it is called “premium”.
If the fund is traded at a price lower than the NAV, it is called “discount”. Similarly if the fund is traded at a price higher than the NAV it is called “premium”.