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ETFs 101: Exchange-Traded Funds

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1.
If you are an active, frequent trader of exchange-traded funds, then your trading expenses will probably _______ those of mutual funds.
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Exceed. Those who trade frequently will probably discover this. So if you plan to trade ETFs frequently, you should take note.
2.
When can you buy exchange-traded funds?
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Anytime during the trading day. As opposed to mutual funds, which are sold at the end of the day no matter when during the day you place your order, you can buy exchange-traded funds at any time during the day.
3.
In what form do investors buy or redeem shares from an exchange-traded fund?
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In blocks of a certain number. The blocks are typically in groups of 50,000 shares.
4.
What are exchange-traded funds?
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Baskets of securities that are traded on an exchange. ETFs are part mutual fund, part stock.
5.
Exchange-traded funds charge commissions.
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True. Unlike their competitors the no-load index funds, ETFs do charge commissions.