Are closed-end companies' shares redeemable?

Closed-end companies, also known as closed-end funds, issue a fixed number of shares that are traded on a stock exchange. Once these shares are sold in the primary market, they typically cannot be redeemed directly with the fund. Instead, investors must sell their shares on the open market to other investors. This structure is fundamentally different from open-end mutual funds, which allow investors to redeem their shares directly back to the fund at the net asset value (NAV).

The trading of closed-end fund shares occurs at market prices that can fluctuate based on supply and demand, which may be above or below the NAV. Because of this unique structure, closed-end companies do not provide a redeemable feature for shareholders, meaning the correct answer highlights that their shares are not redeemable.

This distinction is important for investors to understand when considering investment strategies, as it affects the liquidity and pricing of the investment in the market.