Which of the Following Statements Is Incorrect

question 46

Multiple Choice

Which of the following statements is incorrect?

• A)Exchange-traded funds (ETFs) are designed to mimic particular stock indexes and are traded on a stock exchange.
• B)Unlike a closed-end fund, an ETF has a fixed number of shares.
• C)ETFs differ from most open-end and closed-end funds in that they are not actively managed.
• D)One disadvantage of ETFs is that each purchase of additional shares must be done through the exchange where they are traded.

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Definitions:

Consumer Surplus

The divergence in total intended consumer expenditure on a product or service and the total actual expenditure.

Market Power

The ability of a company or entity to influence or control the terms and conditions of the market to some degree, affecting prices and competition.

Externalities

Financial consequences for unrelated third parties, which can manifest as either positive or negative effects.

Perfectly Competitive

Describes a market structure where many firms sell identical products, there are no barriers to entry, and no single buyer or seller can influence the market price.