What typically defines an open-ended investment company?

An open-ended investment company, commonly known as a mutual fund, is characterized by its ability to continuously offer shares to investors. When investors buy shares in an open-ended fund, they do not buy them from other investors; instead, the fund issues new shares. This means that there is no limit to the number of shares the fund can have in circulation, and as investors purchase or redeem shares, the total value and number of shares change accordingly.

This structure is advantageous because it allows for liquidity; investors can enter and exit the fund relatively easily, with shares being bought and sold at the fund's net asset value (NAV), determined at the end of each trading day. This feature contrasts sharply with closed-ended funds, which issue a fixed number of shares and trade on the exchange like stocks.

The other options fail to represent the fundamental nature of open-ended investment companies. Some of them imply restrictions on who can invest or the share structure, which is not applicable to open-ended funds that welcome continuous investment and redemption from any eligible investor.