SIE practice questionmediumETFs
An investor trades ETF shares during market hours. How does this compare to open-end mutual funds?
- ABoth allow intraday trading at market prices.
- BETF shares can be traded intraday, while mutual funds can only be bought or redeemed at the end of the trading day.✓ Correct answer
- COnly mutual funds trade in the secondary market.
- DETFs have no management fees.
Explanation
Why B — ETF shares can be traded intraday, while mutual funds can only be bought or redeemed at the end of the trading day.
ETFs are traded like stocks throughout the day, whereas mutual fund transactions occur at the NAV calculated once daily. Mutual funds do not trade on exchanges.
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