n NISM Certifications
X NISM Series X
Medium

How do closed-end mutual funds primarily provide liquidity to investors?

Practice question from NISM Series XB- Investment Adviser (Level 1) Mock Test 3 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Limited buyback window

  2. Trading on stock exchange

    Correct answer

  3. C

    Continuous redemption facility

  4. D

    Redemption at regular intervals

Why this is the answer

Since closed-end funds do not allow redemptions directly from the fund, investors buy and sell units on stock exchanges, providing liquidity.

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