alleryStart learning →How often must a mutual fund or an ETF calculate its NAV?
AAt least once every week
BOnly when shares are redeemed
COnce at each month's end
DAt least once every day
Answer & Solution
Correct answer: D. At least once every day
1. SEC rules set a daily floor on NAV calculation for mutual funds and for ETFs alike.
2. Mutual funds price their shares each business day, typically after the major exchanges close.
3. An ETF must also strike a NAV at least once every day, even though its shares trade at market prices in between.
4. Weekly, monthly or on-demand pricing would leave purchase and redemption orders without a price to settle against.
_Source: US SEC Office of Investor Education and Advocacy, "Mutual Funds and ETFs: A Guide for Investors", section Glossary of Key Mutual Fund and ETF Terms_
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