2) Unit Capital will not change even after being listed at Stock Exchange in which of the following type of funds:
Question
Unit Capital will not change even after being listed at Stock Exchange in which of the following type of funds:
Solution
The unit capital will not change even after being listed at Stock Exchange in the case of Closed-End Funds.
Here's why:
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Closed-End Funds: These funds have a fixed number of shares issued to the public through an initial public offering. The capital of these funds does not change with the continuous buying and selling of shares because they do not issue new shares or redeem outstanding ones on a daily basis.
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Open-End Funds (Mutual Funds): These funds do not have a fixed number of shares. Instead, they issue new shares or redeem outstanding ones on a daily basis, directly with the fund. In this case, the unit capital will change as the fund size changes with the daily transactions.
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Exchange-Traded Funds (ETFs): These are a type of open-end fund and are traded on the stock exchange. The unit capital of ETFs can change as they can issue additional shares or redeem shares on a daily basis.
So, the unit capital will not change even after being listed at Stock Exchange in the case of Closed-End Funds.
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