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1.
Which of the following is better structured to shield investors from capital gains?
ETFs. ETFs are better able to shield investors from capital gains, due to the 'in-kind' nature of trading.
2.
The in-kind creation and redemption process for ETFs means that the cost basis of stocks can be done away with.
True. It can be washed away because shares of underlying companies are traded in-kind rather than for cash.
3.
What helps make ETFs generally more tax efficient than mutual funds?
The in-kind creation and redemption process. The in-kind creation and redemption process is the process by which the cost basis of stocks can be washed away since shares of underlying companies are traded in-kind rather than for cash.
4.
An advantage to the exchange-traded aspect of an ETF is _______.
All of the above. ETFs can be traded like stocks, including the use of special order types, shorting and the use of options.
5.
An ETF may be the most cost-effective choice over mutual funds for investors who _______.
All of the above. Otherwise, a mutual fund may be more cost effective.
