Final answer:
The main difference between a closed-end fund and an open-end fund lies in their structure and how shares are bought and sold.
Step-by-step explanation:
The main difference between a closed-end fund and an open-end fund lies in their structure and how shares are bought and sold.
A closed-end fund has a fixed number of shares and is publicly traded on an exchange. These funds are bought and sold on the exchange like stocks, and their prices are determined by supply and demand. The share price of a closed-end fund may trade at a premium or discount to its net asset value (NAV).
On the other hand, an open-end fund continuously issues new shares and redeems existing shares at their NAV. These funds do not trade on an exchange, and investors can buy or sell shares directly from the fund company at the NAV. The number of shares in an open-end fund is not fixed.