02124cas a2200253 a 4500 AALejournalIMF004497 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451848953 1018-5941 BD-DhAAL BD-DhAAL Kramer, Charles. Recent Turmoil in Emerging Markets and the Behavior of Country-Fund Discounts : Renewing the Puzzle of the Pricing of Closed-End Mutual Funds / Charles Kramer, T. Smith. Washington, D.C. : International Monetary Fund, 1995. 1 online resource (30 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper argues that recent movements in closed-end emerging markets funds present a strong challenge to the leading explanations of the behavior of closed-end country fund prices. In particular, closed-end funds dedicated to Mexico and other Latin American stock markets developed large premia after the December 1994 devaluation of the Mexican peso and the subsequent financial crisis. The so-called 'investor sentiment hypothesis' could explain these events only by suggesting that investors became very optimistic about emerging markets stocks, and especially Mexican stocks; this possibility seems unlikely given the facts surrounding the devaluation. We argue instead that a sensible explanation for recent dynamics of closed-end country funds is that investors in these funds are loss-averse, implying that they do not want to realize paper losses on their closed-end fund shares. This works to put a drag on the downward movement in closed-end fund prices. Mode of access: Internet Smith, T. IMF Working Papers; Working Paper ; No. 1995/068 Full text available on IMF http://elibrary.imf.org/view/journals/001/1995/068/001.1995.issue-068-en.xml IMF e-Library