The Significant Difference Between HOLDRs and ETFs Is That

question 101

Multiple Choice

The significant difference between HOLDRs and ETFs is that

• A)the owner of the HOLDR has rights to the underlying stock.
• B)HOLDRs are not traded in financial markets.
• C)ETFs are not traded in financial markets.
• D)owners of HOLDRs do not pay commissions on trades.

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Definitions:

Economics

The social science that studies how individuals, governments, firms, and nations make choices on allocating scarce resources to satisfy their unlimited wants.

Signaling

The act of conveying information indirectly through actions or attributes, often seen in markets where there is information asymmetry.

Uninformed Party

An individual or group lacking critical information, often leading to a disadvantage in decisions or negotiations.

Moral Hazard

The situation where one party engages in risky behavior because they know another party bears the consequences of that risk.