Closed-end funds carry several distinct financial risks, including market price volatility, the potential to trade at a significant discount or premium relative to their underlying net asset value, and the use of financial leverage. Because these funds issue a fixed number of shares that trade on public exchanges, investor demand can cause market prices to diverge sharply from the actual value of the portfolio holdings. Additionally, funds that utilize borrowed money to amplify returns can experience magnified losses during broader market downturns.