Which of the Following Describes Why Exchange-Traded Funds Have Less

question 160

Multiple Choice

Which of the following describes why exchange-traded funds have less need for a portfolio manager than closed-end funds?

• A) ETFs normally invest in stocks, bonds, or securities within a specific index.
• B) ETFs are actively managed.
• C) ETFs have portfolio managers that actively select stocks and other securities on a regular basis.
• D) ETF fees are generally higher.
• E) ETFs usually hold investments in a minimum of three indexes.

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Definitions:

Time Value

The additional amount an investor is willing to pay for an option or other financial product based on its potential to increase in value over time.

Out-of-the-Money

Describes an option that would not result in a profit if exercised immediately because its strike price is less favorable compared to the market price of the underlying asset.

Exercise Price

The specified price at which the holder of an option contract can buy (for a call option) or sell (for a put option) the underlying asset.

Stock Price

The cost of purchasing a share of a company's stock.