[amp_mcq option1=”is selling at a discount” option2=”is selling at a premium” option3=”is an index fund” option4=”is an exchange traded fund” correct=”option1″]
The correct answer is: A. is selling at a discount.
The net asset value (NAV) of a fund is the total value of its assets minus its liabilities, divided by the number of shares outstanding. The market price of a fund is the price at which shares of the fund are bought and sold on an exchange. If the NAV of a fund is greater than its market price, then the fund is selling at a discount. This means that investors can buy shares of the fund for less than the value of the fund’s assets.
Option B is incorrect because a fund that is selling at a premium is one whose market price is greater than its NAV. Option C is incorrect because an index fund is a type of mutual fund that tracks a specific market index, such as the S&P 500. Option D is incorrect because an exchange traded fund (ETF) is a type of mutual fund that trades on an exchange like a stock.