Choose wisely. There is only one correct answer to each question.
0%
Keep studying!
Review your answers below to learn more.
1.
When it comes to earning money on them, exchange-traded notes promise investors _______.
The return on a given index minus fees. ETNs follow a given index and promise returns based on that. They do not guarantee that return, however.
2.
An investor in exchange-traded notes can look forward to the kinds of regulatory protections that exchange-traded funds and open-end mutual funds enjoy.
False. ETNs are not governed under the same regulatory structure as those other investments.
3.
Distributions from exchange-traded notes are taxed at _______.
Ordinary income rates. Distributions, though rare, are taxed at ordinary income rates.
4.
A sizable premium or discount on an exchange-traded note could be a red flag. Why?
Either of the above. Either of these situations could lead to big premiums or discounts on an exchange-traded note.
5.
A large premium on an existing exchange-traded note might do what if new shares of the note are issued?
Fall. Large premiums can quickly collapse upon the issuance of new shares of an exchange-traded note.
