Which of the Following Is a Difference Between an Exchange-Traded

question 86

Multiple Choice

Which of the following is a difference between an exchange-traded fund (ETF) and a mutual fund?

• A) An ETF is a fixed-income instrument, whereas a mutual fund is a variable-income instrument.
• B) An ETF can only be traded at the end of the day, whereas a mutual fund can be bought or sold throughout the trading day.
• C) An ETF provides more favorable tax treatment than a mutual fund.
• D) An ETF is a convertible security, whereas a mutual fund is a nonconvertible security.
• E) An ETF is a hybrid security, whereas a mutual fund is not a hybrid security.

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Definitions:

Commodity

A basic good used in commerce that is interchangeable with other goods of the same type.

Dividend-Paying Assets

Investments like stocks that provide a return to investors in the form of dividends, or periodic payments from the company's earnings.

Spot-Futures Parity

A theoretical pricing model that suggests the relationship between the spot price of an asset and its corresponding futures price, based on the cost of carry.

Relationship

The way in which two or more concepts, objects, or people are connected, or the state of being connected.