What Is the Advantage of Exchange-Traded Funds (EFTs)over Mutual Funds

question 46

Multiple Choice

What is the advantage of exchange-traded funds (EFTs) over mutual funds?

• A) They can be traded throughout the day like a stock.
• B) The cost of the fund management is passed on to the holder.
• C) They do not require the services of a broker to complete a transaction.
• D) They allow for frequent trading with lower overall transaction fees.
• E) They regularly out-perform mutual funds.

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Definitions:

Total Cost

The full expense incurred in the production or acquisition of goods or services, including both fixed and variable costs.

Marginal Cost

The supplementary charge triggered by the manufacture of one extra unit of a product or service.

Average Variable Cost

The total variable cost divided by the quantity of output produced; it represents the variable cost per unit of output.

Marginal Cost

The incremental cost associated with the production of an additional unit of a product or service.