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1.
If you are an active, frequent trader of exchange-traded funds, then your trading expenses will probably _______ those of mutual funds.
Exceed. Those who trade frequently will probably discover this. So if you plan to trade ETFs frequently, you should take note.
2.
Exchange-traded funds are a type of mutual fund.
False. Exchange-traded funds are not mutual funds; they are baskets of securities that are traded on an exchange. They are actually part mutual fund, part stock.
3.
Compared to mutual funds, exchange-traded funds are ______ to make capital-gains distributions.
Less likely. However, at times they must, in order to adjust for changes to their underlying indexes.
4.
The price of an exchange-traded fund on the market is _______.
Either the net asset value or a price higher or lower than that. Exchange-traded funds do not necessarily trade at the net asset values of their underlying holdings; they are sometimes higher or lower, based on demand and other factors.
5.
In general, exchange-traded funds are cheaper to buy than index mutual funds if you want to trade regularly.
False. Because of their commissions, regular trading will likely cost you more with exchange-traded funds.
