Closed-End Fund Consists of a fixed number of shares thatare traded in the same way as the sharesof any other companyThe share price tends to be less than theNAV calculated from the market value ofthe investments6RiskManagementandFinancialInstitutions3e,Chapter4,CopyrightJohnC.Hull2012
Closed-End Fund ⚫ Consists of a fixed number of shares that are traded in the same way as the shares of any other company ⚫ The share price tends to be less than the NAV calculated from the market value of the investments Risk Management and Financial Institutions 3e, Chapter 4, Copyright © John C. Hull 2012 6
Exchange-Traded Funds (ETFspage 71) Often designed to track an indexStarted by an institutional investor that deposits ablock of securities and obtains shares in the fund Shares are traded on an exchangeLarge institutional investors can exchange shares inthe fund for the underlying assets, and vice versaThis keeps the share price close to the NAV of thefund's investments7RiskManagementandFinancialInstitutions3e,Chapter4,CopyrightJohnC.Hull 2012
Exchange-Traded Funds (ETFs, page 71) ⚫ Often designed to track an index ⚫ Started by an institutional investor that deposits a block of securities and obtains shares in the fund ⚫ Shares are traded on an exchange ⚫ Large institutional investors can exchange shares in the fund for the underlying assets, and vice versa ⚫ This keeps the share price close to the NAV of the fund’s investments Risk Management and Financial Institutions 3e, Chapter 4, Copyright © John C. Hull 2012 7