Question

Which type of management companies allow for the purchase of fractional shares?

A) Closed-end management companies
B) Open-end management companies
C) Unit investment trusts
D) Real estate investment trusts

Answer 1

Open-end management companies allow for the purchase of fractional shares, making it easier for investors to own a portion of expensive securities.

Step-by-step explanation:

Open-end management companies allow for the purchase of fractional shares. Open-end management companies are investment companies that issue new shares to investors and redeem existing shares on a continuous basis. This allows investors to buy and sell shares at their net asset value (NAV), which is calculated at the end of each trading day. Fractional shares allow investors to own a portion of a share, making it easier to invest in expensive securities.