Finance · Financial Markets
Closed-ended funds generally maintain lower cash reserves/liquid funds than open-ended funds because:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Open-ended funds tend to invest primarily in illiquid long-term assets.
- 2Closed-ended funds operate under a legally restricted operational lifetime.
- 3Open-ended funds must allow investors to redeem their shares/units at any time.✓
- 4Open-ended funds pay higher tax rates than closed-ended funds.
Correct answer
Open-ended funds must allow investors to redeem their shares/units at any time.
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