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ETFs 105: Exchange-Traded Funds and Fixed Income

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1.
Fixed income is more actively traded than stocks?
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False. Stocks are traded much more frequently than bonds.
2.
When you invest in a broad-based bond ETF, one result is reduced risk. This is due to _______.
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Diversification. As a rule, a broad base will offer diversification, which generally reduces risk.
3.
Individual bonds trade on the exchange like ETFs?
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False. Bonds are traded on the over-the-counter market.
4.
When you buy a fixed-income ETF that focuses on a particular type of bond, you expose yourself to additional risks.
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True. As a rule, a limited focus opens up a new field of risks.
5.
Which exchange-traded fund is exposed to more risk?
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An emerging-markets-bond ETF that hold 10-15 years to maturity. Emerging-markets bonds are one of the most volatile asset classes, and long-maturity bonds carry the most interest-rate risk.