James makes the following incorrect statements regarding the advantages and disadvantages of an Open-end funds (OEF) over Close-end funds (CEFs). Explain why his statements are incorrect. Make sure you address each statement individually.

Statement 1: Open-end funds will have lower (compared with CEFs) management fee since they can increase the assets undermanagement and take advantage of the economies of scale.

Statement 2: Open end funds are not riskier than CEFs since OEFs are restricted from holding short positions, use derivatives or borrow money, while OEFs have an all-equity structure.

Statement 3: Open-end funds NAV are more transparent than close-end funds, because the NAV of an OEF will only increase or decrease IF the value of the asset changes in value .