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:

Savings Plan

A strategy designed to help individuals allocate a portion of their income for future use, typically involving deposit accounts or investments.

Semi-Annual Deposits

Deposits made twice a year into a financial account or investment vehicle.

Compounded Quarterly

Refers to the process of calculating interest on both the initial principal and the accumulated interest from previous periods on a quarterly basis.

Compounded Semi-Annually

Interest that is computed and added to the principal twice a year, allowing the investment to grow more rapidly.