Discuss Finra SIE Exam Topic 5 Question 23

Which of the following statements is true of an index exchange-traded fund (ETF)?

AIt has a high portfolio turnover ratio.

BIt is priced once daily, generally at the market close.

CIt offers an opportunity to outperform the index it tracks.

DPassive ETFs will typically have lower fees than those associated with actively managed ETFs.

Suggested Answer: D

Passive ETFs track an index and require minimal management, leading to lower expenses compared to actively managed ETFs.

D is correct because passive ETFs are cost-efficient and have lower fees.

A is incorrect because index ETFs have low turnover since they replicate an index.

B is incorrect because ETFs are priced continuously throughout the trading day.

C is incorrect as ETFs aim to match, not outperform, the index.

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29 comments · newest first

Andra 9 hours ago

Yeah, I agree with B. Makes sense for ETFs.

Laticia 6 days ago

I think B is true. Priced once daily, right?

Javier 11 days ago

So, we all agree on D being the best choice?

Keshia 16 days ago

Exactly! Index funds are meant to track, not trade frequently.

Malcolm 21 days ago

I feel like A is misleading. High turnover isn’t typical for index ETFs.

Francoise 26 days ago

D makes sense. Lower fees mean better returns over time.

Javier 1 month ago

Right, but D still stands out for me.

Keshia 1 month ago

True, but most index ETFs settle at market close.

Malcolm 1 month ago

But B isn’t always true. Some trade throughout the day.

Francoise 2 months ago

I’m leaning towards B. Daily pricing is standard for ETFs.

Keshia 2 months ago

Agreed! Passive ETFs are cheaper to manage.

Javier 2 months ago

I think D is true. Lower fees are a big plus.

Val 2 months ago

D is definitely the best choice. Lower fees attract investors.

Marlon 2 months ago

I lean towards B. Daily pricing is important for trading.

Fletcher 2 months ago

D stands out for me. Fees matter in the long run.

Valene 3 months ago

I feel confused. All options seem plausible.

Peggie 3 months ago

True, but D is still more relevant for ETFs.

Hollis 3 months ago

But what about B? Daily pricing is a key feature.

Altha 3 months ago

I agree, D makes sense. Passive management saves costs.

Florinda 3 months ago

I think D is true. Lower fees are a big plus.

Lashaun 3 months ago

D is spot on, passive ETFs are way cheaper!

Nathalie 4 months ago

Wait, can ETFs really outperform the index? Sounds fishy.

Ligia 4 months ago

A is definitely false, ETFs usually have low turnover.

Hortencia 4 months ago

Totally agree with D, lower fees are a big plus!

Phung 4 months ago

B is true, ETFs are priced at market close.

Santos 4 months ago

I have a vague memory of a practice question about ETFs outperforming their index, and I think C might be misleading.

Meaghan 6 months ago

I feel like we went over portfolio turnover ratios, and I think A is definitely not true for index ETFs.

Tess 6 months ago

I remember discussing that passive ETFs usually have lower fees than active ones, so D could be right.

Yolando 6 months ago

I think option B sounds familiar, but I'm not entirely sure if it's the only correct statement.

Finra SIE Exam - Topic 5 Question 23 Discussion