SIE practice questionmediumETFs
A distinguishing feature of ETFs, compared to mutual funds, is that ETFs:
- AAlways outperform mutual funds
- BAllow for creation and redemption of large share blocks by authorized participants✓ Correct answer
- CAre only available to institutional investors
- DAre actively managed by definition
Explanation
Why B — Allow for creation and redemption of large share blocks by authorized participants
A is correct; ETF shares are created or redeemed in large lots by authorized participants, helping keep prices close to NAV. B is incorrect—performance varies. C is false as ETFs are available to retail investors. D is wrong—many ETFs are passively managed.
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