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Closed ended schemes generally offer exit option to investors through a Stock exchange2 pointsa) Trueb) Falsec) Partly Trued) Partly False

Question

Closed ended schemes generally offer exit option to investors through a Stock exchange 2 points

a) True
b) False
c) Partly True
d) Partly False

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Solution

Analysis of the Statement

Closed-ended schemes are investment funds that pool money from investors but do not allow investors to redeem their shares directly with the fund. Instead, they issue a fixed number of shares that trade on a stock exchange. These types of schemes typically provide liquidity to investors through the stock market where they can buy and sell their shares.

  1. True: This option suggests that closed-ended schemes do offer an exit option through a stock exchange, which is accurate since investors can sell their shares on the market.

  2. False: This indicates that there is no exit option, which is incorrect as investors can exit through trading on the stock exchange.

  3. Partly True: This suggests that there may be some conditions or limitations on the exit option, which is not applicable as closed-ended funds have a clear mechanism for exit via the stock exchange.

  4. Partly False: This implies that there might be some accessible exit strategies that do not include the stock exchange, which is not the case.

Conclusion

The correct answer is a) True, as closed-ended schemes do indeed offer an exit option to investors through a stock exchange.

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