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1.
Exchange-traded funds provide exposure to commodities markets.
True. ETFs provide more exposure to commodities than they ever did before.
2.
Commodity or currency exchange-traded funds _______.
Can provide diversification to a portfolio in small doses. Commodities and currencies can be uncorrelated to broader stock market returns and can therefore help diversify portfolios.
3.
Exchange-traded funds are a cost-effective choice for investors who _______.
Use discount brokers, invest a large lump sum of money, and are willing to hold the investment for the long term. For others, an exchange-traded fund may not have a big cost advantage over a plain-vanilla, low-cost index fund.
4.
Most exchange-traded funds are index funds.
True. This fact has many advantages for investors who want to minimize capital gains, as index funds rarely sell their holdings.
5.
If you want to buy or sell into an exchange-traded fund, you can do so with the fund itself, like with a mutual fund.
False. Exchange-traded funds are different in this respect. You must do your trading with other investors, not the fund itself.
