SIE practice questionhardETFs
An authorized participant in the ETF creation/redemption process primarily helps:
- AKeep the ETF's market price close to its NAV through arbitrage✓ Correct answer
- BGuarantee profits for all ETF investors
- CSet the ETF’s management fee
- DDetermine the index the ETF will track
Explanation
Why A — Keep the ETF's market price close to its NAV through arbitrage
A is correct; authorized participants use arbitrage to align ETF prices with NAV. B is false—profits are not guaranteed. C is set by the sponsor, not participants. D is decided by the ETF provider.
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