Which of the Following Statements Is NOT a Difference Between

question 23

Multiple Choice

Which of the following statements is NOT a difference between an exchange traded fund (ETF) and an index fund?

• A) An ETF is structured to track a market index using a diversified basket of securities while an IMF focuses on tracking a market index using a portfolio comprising a defined group of securities within the index.
• B) The structure of an ETF provides greater liquidity than an IMF since its market prices change throughout the day while an IMF is valued only one a day.
• C) An ETF offers a daily disclosure of holdings while an IMF typically discloses through quarterly reports.
• D) An IMF will distribute realized capital gains and losses more frequently than an IMF.

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Definitions:

Budget Constraint

A limit on the consumption choices of individuals or entities based on their income and the prices of goods and services, representing all possible combinations of goods and services that can be purchased.

Utility Function

A mathematical representation that ranks individuals' preferences over a set of goods and services to represent satisfaction levels.

Consumption Bundle

A combination of different goods and services that a consumer chooses to consume at a given time.

Marginal Utility

The additional satisfaction or benefit (utility) that a consumer derives from purchasing and consuming an additional unit of a good or service.