Mutual Fund

B is correct. Mutual funds use forward pricing, meaning all purchase and redemption orders received during the trading day execute at the next calculated NAV after the order is received. Since Jennifer placed her order before 4 PM ET market close, her order executes at the NAV calculated at 4 PM ($49.20), regardless of what the NAV was when she placed the order.

A is incorrect because mutual funds do not allow investors to "lock in" the NAV at order placement time - forward pricing prevents market timing. C is incorrect because mutual funds do not average NAV values; they use the single forward-priced NAV. D is incorrect because mutual funds do not trade at market prices throughout the day like ETFs; they only transact at the end-of-day NAV.

B is correct. Open-end investment companies (mutual funds) continuously create new shares when investors buy and redeem (buy back) shares when investors sell, all at the current NAV. This "open" structure means the number of shares outstanding changes daily based on investor demand.

A is incorrect because mutual funds do NOT trade on exchanges - they transact directly with the fund company at NAV. Exchange trading describes closed-end funds and ETFs. C is incorrect because having a fixed number of shares outstanding describes closed-end funds, not open-end mutual funds. D is incorrect because the purchase method does not define the open-end structure; many mutual funds can be purchased directly from the fund company without a broker.

A is correct. NAV per share = (Total Assets - Liabilities) / Shares Outstanding = ($450M - $12M) / 20M = $438M / 20M = $21.90 per share.

B ($22.50) incorrectly divides total assets by shares without subtracting liabilities ($450M / 20M = $22.50). C ($23.10) uses an incorrect calculation, possibly adding instead of subtracting liabilities. D ($25.00) does not reflect the correct formula and may confuse NAV with market price.

C is correct (the EXCEPT answer). Mutual fund shares do NOT trade on exchanges or at market-determined prices. They transact directly with the fund company at NAV. Intraday exchange trading at market prices describes ETFs and closed-end funds, not mutual funds.

A is accurate: mutual funds must redeem shares at NAV upon investor request (typically within 7 days). B is accurate: the open-end structure means shares outstanding change daily as the fund issues new shares for purchases and cancels shares upon redemption. D is accurate: mutual funds use forward pricing, with all orders executing at the NAV calculated at 4 PM ET market close, regardless of when during the day the order was placed.

D is correct. All four statements are accurate characteristics of mutual fund investing.

Statement 1 is TRUE: Mutual funds employ professional portfolio managers who make investment decisions and actively manage the portfolio according to the fund's stated objectives.

Statement 2 is TRUE: Even a small investment in a mutual fund provides instant diversification because the fund pools money to invest in many different securities (typically 50-200+ holdings).

Statement 3 is TRUE: Mutual funds are open-end investment companies that must redeem shares at NAV upon investor request, typically within 7 days. This provides liquidity at a fair price (NAV), not a market-determined price.

Statement 4 is TRUE: The expense ratio includes the management fee (typically 0.50%-1.50%) and may include 12b-1 fees for marketing and distribution (up to 1.00%), plus other operating expenses. These ongoing fees reduce the fund's net returns to investors.