Final answer:
Both closed-end funds and mutual funds may involve the payment of commissions, which can be in the form of sales loads or broker commissions.
Step-by-step explanation:
Both closed-end funds and mutual funds may involve the payment of commissions.
Closed-end funds are traded on stock exchanges like individual stocks, so they can be bought or sold from brokers, who may charge commissions. Additionally, closed-end funds may have sales loads, which are fees that investors pay when purchasing shares of the fund. These commissions and sales loads compensate the brokers and the fund companies for their services.
Mutual funds, on the other hand, are typically purchased directly from the fund company, and investors may have to pay commissions or sales loads depending on the sales channels they use. Some mutual funds are sold through brokers, who charge commissions, while others are sold directly to investors without commissions. It's important for investors to carefully review the prospectus of a mutual fund to understand any associated fees.