Investment VehiclesQuestion 23 of 110
Which statement about exchange-traded funds (ETFs) is accurate?
a.ETFs are redeemed only once per day at net asset value
b.ETFs trade throughout the day on an exchange at market prices
c.ETFs are prohibited from tracking an index
d.ETFs cannot be bought on margin or sold short
Explanation
ETFs trade intraday on exchanges at market-determined prices, unlike open-end mutual funds that transact at end-of-day NAV. Many ETFs are designed to track an index. Because they trade like stocks, ETFs can generally be bought on margin and sold short.
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