The primary reason a close-ended scheme often trades below its NAV on …

Question

The primary reason a close-ended scheme often trades below its NAV on the exchange is

Accepted Answer

D. {'text': 'The buyer has options while the seller has fixed units', 'label': 'D'}

1. Post-NFO, close-ended units trade only between investors on the exchange.
2. Buyers can choose from many alternatives while sellers hold specific close-ended units.
3. This bargaining asymmetry pushes the price below the underlying NAV.
4. SEBI does not mandate a discount; the discount emerges from market dynamics.
_Source: NISM Series V-A: Mutual Fund Distributors Workbook (Dec 2019), Ch 2 "Concept and Role of a Mutual Fund", §2.2.1_

Answer

{'text': 'SEBI mandates a fixed discount to NAV for such trades', 'label': 'A'}

Answer

{'text': 'AMCs actively bid down the price to grow future AUM', 'label': 'B'}

Answer

{'text': 'The scheme pays a levy on every secondary market trade', 'label': 'C'}