Help
Course Catalog > ETFs > 100
ETFs 104: Mutual Funds or Exchange-Traded Funds--Which to Choose?

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!

Get a certificate for this quiz
Enter your name and email address below to receive certificate for this course. You will need this to confirm you have completed it.


Review your answers below to learn more.
1.
A potential disadvantage to the exchange-traded aspect of an ETF is _______.
Choose wisely. There is only one correct answer.
All of the above. Market prices of an ETF can deviate from the underlying net asset value. ETFs are bought and sold likes stocks, so bid ask spread costs and commissions costs can be incurred.
2.
An ETF may be the most cost-effective choice over mutual funds for investors who _______.
Choose wisely. There is only one correct answer.
All of the above. Otherwise, a mutual fund may be more cost effective.
3.
What helps make ETFs generally more tax efficient than mutual funds?
Choose wisely. There is only one correct answer.
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.
Which of the following is better structured to shield investors from capital gains?
Choose wisely. There is only one correct answer.
ETFs. ETFs are better able to shield investors from capital gains, due to the 'in-kind' nature of trading.
5.
A key difference between mutual funds and exchange-traded funds is _______.
Choose wisely. There is only one correct answer.
ETFs are traded on an exchange, whereas mutual funds are traded with the fund company. The "ET" in ETF stands for exchange-traded. ETFs are bought and sold on an exchange like a stock, whereas mutual funds are transacted either directly or through a broker with the fund company.