Mutual Funds
The redemption value of open-end investment company shares is based on:
Forward pricing: Buy/sell at NEXT NAV (4pm). Prevents market timing.
Complete Analysis & Legal Rationale
Open-end funds use forward pricing - shares are redeemed at the NAV calculated at the close of business AFTER the order is received. This ensures all investors receive the same price on a given day.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Previous offering price is not used for redemptions.
Previous NAV would allow market timing arbitrage.
Matches the verified teaching point in the explanation.
Offering price includes sales charge; redemptions are at NAV.
Official Standard: Regulatory framework for investment companies including mutual funds (verify current text).
Official Standard: Outline-level citation pending rule-specific upgrade. Verify against current FINRA Series 7 outline.