Test your knowledge

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

0%
Keep studying!
Review your answers below to learn more.
1.
Exchange-traded notes are similar to traditional exchange-traded funds. Therefore, they are funds.
Choose wisely. There is only one correct answer.
False. They are essentially bonds, not funds. They do not hold a fundful of securities.
2.
A large premium on an existing exchange-traded note might do what if new shares of the note are issued?
Choose wisely. There is only one correct answer.
Fall. Large premiums can quickly collapse upon the issuance of new shares of an exchange-traded note.
3.
An investor in exchange-traded notes can look forward to the kinds of regulatory protections that exchange-traded funds and open-end mutual funds enjoy.
Choose wisely. There is only one correct answer.
False. ETNs are not governed under the same regulatory structure as those other investments.
4.
Distributions from exchange-traded notes are taxed at _______.
Choose wisely. There is only one correct answer.
Ordinary income rates. Distributions, though rare, are taxed at ordinary income rates.
5.
A sizable premium or discount on an exchange-traded note could be a red flag. Why?
Choose wisely. There is only one correct answer.
Either of the above. Either of these situations could lead to big premiums or discounts on an exchange-traded note.