Choose wisely. There is only one correct answer to each question.
0%
Keep studying!
Review your answers below to learn more.
1.
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.
2.
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.
3.
Which statement below is true?
Exchange-traded funds offer investors a way to invest in a corner of the market without having to load up on just one or two individual stocks. As such, investors find them helpful for gaining limited exposure there.
4.
If you incur a lot of costs while investing in exchange-traded funds, those costs will most likely be _______.
Brokerage commissions. Overhead is pretty low because the need for it is low. But you will need to pay brokerage commissions for buying and selling, and they will add up if you trade a lot.
5.
Exchange-traded funds provide exposure to commodities markets.
True. ETFs provide more exposure to commodities than they ever did before.
