Funds Beginner: Introduction to Exchange-Traded Funds

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.
Which statement is false about exchange-traded funds?
Choose wisely. There is only one correct answer.
ETFs are always the cheaper choice for all investors. Although the annual expenses of ETFs are below those of mutual funds, you must pay a commission each time you buy an ETF. As a result, ETFs may not be cheaper choices for investors who invest a little bit at a time, or those who trade actively.
2.
Compared to mutual funds, exchange-traded funds are ______ to make capital-gains distributions.
Choose wisely. There is only one correct answer.
Less likely. However, at times they must, in order to adjust for changes to their underlying indexes.
3.
In what form do investors buy or redeem shares from an exchange-traded fund?
Choose wisely. There is only one correct answer.
In blocks of a certain number. The blocks are typically in groups of 50,000 shares.
4.
Exchange-traded funds charge commissions.
Choose wisely. There is only one correct answer.
True. Unlike their competitors the no-load index funds, ETFs do charge commissions.
5.
What are exchange-traded funds?
Choose wisely. There is only one correct answer.
Baskets of securities that are traded on an exchange. ETFs are part mutual fund, part stock.