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Which of the following statements describes a characteristic of exchange-traded funds (ETFs)?
Suggested Answer: D
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Step by Step Explanation:
ETF Expense Ratios: ETFs generally have lower expense ratios compared to mutual funds due to their passive management style.
Incorrect Options:
A: ETFs do not have sales loads; they are traded like stocks.
B: ETFs can be purchased on margin, like other equities.
C: ETFs are traded throughout the day at market prices, not NAV.
SEC ETF Fact Sheet: SEC ETF Info.
28 comments · newest first
JE
Jeannine
11 months ago
Wait, are you sure they can be bought on margin?
JE
Jerry
11 months ago
Totally agree, that's one of their best features!
RE
Reena
11 months ago
I thought ETFs had loads like mutual funds?
DO
Dottie
11 months ago
They trade daily at market price, not NAV.
SA
Sang
11 months ago
ETFs usually have lower expense ratios than mutual funds.
MI
Miesha
12 months ago
I practiced a question similar to this, and I think the one about NAV is misleading; I believe ETFs trade at market price, not NAV.
WI
William
12 months ago
I feel like the statement about purchasing ETFs on margin might be incorrect, but I need to double-check that.
MA
Maia
1 year ago
I remember something about ETFs being traded like stocks, but I can't recall if they have front-end or back-end loads.
MO
Moira
1 year ago
I think ETFs usually have lower expense ratios compared to mutual funds, but I'm not entirely sure if that's the only characteristic they have.
TA
Tambra
1 year ago
Wait, I thought ETFs could be purchased on margin. I'm a little confused now. I better review my notes to make sure I understand the differences between ETFs and mutual funds.
WE
Wenona
1 year ago
Okay, I've got this. ETFs are traded on exchanges like stocks, so they can't be purchased at NAV like mutual funds. And their expense ratios are generally lower than mutual funds. I'm pretty confident in that.
PE
Pearlene
1 year ago
Hmm, I'm a bit unsure about this one. I know ETFs are different from mutual funds, but I'm not totally clear on the specifics. I'll have to think it through carefully.
NI
Niesha
1 year ago
This question seems pretty straightforward. I think the key is to focus on the characteristics of ETFs that distinguish them from other investment vehicles.
LO
Lorean
1 year ago
Yes, that's true. But the expense ratio is a key advantage of ETFs.
JA
Javier
1 year ago
Haha, can you imagine trying to buy an ETF at NAV every day? That would be a nightmare for the fund managers. Definitely option D is the winner here.
BL
Blair
1 year ago
But aren't ETFs also purchased and sold daily at NAV?
AD
Adelina
1 year ago
I agree with Lorean, ETF expense ratios are usually lower.
HE
Herminia
1 year ago
Hmm, I'm not sure about option B. I thought ETFs could be purchased on margin, just like stocks. Gotta double-check that one.
BR
Britt
1 year ago
User 3: I'm not sure about option B either. I'll have to look into that.
PE
Percy
1 year ago
User 2: I agree, ETFs are known for their lower expense ratios.
BE
Bernardine
1 year ago
User 1: I think option D is correct. ETFs usually have lower expense ratios than mutual funds.
ET
Ethan
1 year ago
I agree with Maxima. The low expense ratios of ETFs are one of their biggest advantages over traditional mutual funds.
MI
Mitsue
1 year ago
That's true, the low expense ratios of ETFs are definitely a big advantage.
JA
Jacklyn
1 year ago
I think D) ETF expense ratios are generally lower than those of mutual funds.
MA
Maxima
1 year ago
Option D seems like the correct answer. ETF expense ratios are generally lower than mutual funds, making them a more cost-effective investment option.
PA
Pansy
1 year ago
That's true, lower expense ratios make ETFs a more attractive investment choice.
PA
Pansy
1 year ago
I agree, ETFs usually have lower expense ratios compared to mutual funds.
LO
Lorean
1 year ago
I think the answer is D.