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
ETF shares are created and redeemed in large blocks by authorized participants, a process that helps keep market prices close to NAV. ETFs are available to retail investors, performance is not guaranteed, and many are passively managed.
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