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Finra SIE Exam - Topic 5 Question 23 Discussion

Which of the following statements is true of an index exchange-traded fund (ETF)?
D) Passive ETFs will typically have lower fees than those associated with actively managed ETFs.
A) It has a high portfolio turnover ratio.
B) It is priced once daily, generally at the market close.
C) It offers an opportunity to outperform the index it tracks.

Finra SIE Exam - Topic 5 Question 23 Discussion

Actual exam question for Finra's SIE exam
Question #: 23
Topic #: 5
[All SIE Questions]

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

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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.


by Nancey at May 02, 2026, 07:46 AM

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Ligia
2 hours ago
A is definitely false, ETFs usually have low turnover.
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Hortencia
5 days ago
Totally agree with D, lower fees are a big plus!
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Phung
10 days ago
B is true, ETFs are priced at market close.
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Santos
16 days ago
I have a vague memory of a practice question about ETFs outperforming their index, and I think C might be misleading.
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Meaghan
2 months ago
I feel like we went over portfolio turnover ratios, and I think A is definitely not true for index ETFs.
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Tess
2 months ago
I remember discussing that passive ETFs usually have lower fees than active ones, so D could be right.
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Yolando
2 months ago
I think option B sounds familiar, but I'm not entirely sure if it's the only correct statement.
upvoted 0 times
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