GU International Bond Funds Open End and Closed End Fund Discussion

Question Description

Melanie is considering purchasing shares in an international bond fund. She has limited her search to one open-end and one closed-end fund. Information on the funds follows:

	Open-End		Closed-End
NAV	$ 13.63		$ 26.19
Sales price	no-load		$ 22.96
Annual expenses	1.17	%	0.94	%
YTD return	11.35	%	11.79	%

a. How much would Melanie pay per share for the open-end fund? How much would she pay per share for the closed-end fund?

b. Is the closed-end fund selling at a discount or a premium to its NAV?

c. Given both funds’ similar returns and expense ratios, would you recommend that Melanie purchase the closed-end fund? Why or why not?

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