Series 7 practice questioneasyPackaged Products — ETFs
Unlike mutual funds, exchange-traded funds (ETFs) can be:
- APurchased only at the end of the trading day at NAV
- BPurchased only through the fund's underwriter
- CRedeemed directly with the fund company by individual investors
- DTraded throughout the day on an exchange at market prices✓ Correct answer
Explanation
Why D — Traded throughout the day on an exchange at market prices
ETFs trade on exchanges throughout the trading day at market prices, just like stocks. This is a key advantage over mutual funds, which are priced only once at the end of each trading day at NAV. ETFs can also be sold short, purchased on margin, and have limit orders placed on them.
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