What must an investor pay when purchasing shares from issuers of mutual funds?

What must an investor pay when purchasing shares from issuers of mutual funds?

• A. The bid price
• B. The ask price
• C. The market price
• D. The quoted price

Answer: (B)

When an investor purchases shares from issuers of mutual funds, they must pay the ask price. This price reflects the minimum price that a seller is willing to accept for the mutual fund shares, which is standard in investment transactions. In mutual funds, shares are bought directly from the fund itself rather than on a secondary market, so investors do not deal with a bid price or market price, as these concepts apply more to stocks traded on exchanges. The quoted price often refers to the price that is available in the market, but for mutual funds, the specific price is determined at the end of the trading day based on the calculated net asset value (NAV) of the fund. Therefore, when investors buy mutual fund shares, they are effectively paying the ask price defined for that specific fund, which correlates with the NAV plus any applicable sales charges, if any are involved.

When an investor purchases shares from issuers of mutual funds, they must pay the ask price. This price reflects the minimum price that a seller is willing to accept for the mutual fund shares, which is standard in investment transactions.

In mutual funds, shares are bought directly from the fund itself rather than on a secondary market, so investors do not deal with a bid price or market price, as these concepts apply more to stocks traded on exchanges. The quoted price often refers to the price that is available in the market, but for mutual funds, the specific price is determined at the end of the trading day based on the calculated net asset value (NAV) of the fund. Therefore, when investors buy mutual fund shares, they are effectively paying the ask price defined for that specific fund, which correlates with the NAV plus any applicable sales charges, if any are involved.