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Portfolios 403: Exchange-Traded Funds

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1.
Exchange-traded funds are a cost-effective choice for investors who _______.
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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.
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.
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False. Exchange-traded funds are different in this respect. You must do your trading with other investors, not the fund itself.
3.
Can exchange-traded funds be good choices for investors who are looking for core stock exposure?
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Yes, because there are several inexpensive, broad market ETFs that track major large-cap indexes.
4.
Exchange-traded funds provide exposure to commodities markets.
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True. ETFs provide more exposure to commodities than they ever did before.
5.
If you incur a lot of costs while investing in exchange-traded funds, those costs will most likely be _______.
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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.