SIE practice questionhardETFs
Which factor most limits significant price deviations between an ETF's market price and its net asset value?
- AListing on the NYSE or NASDAQ
- BDaily calculation of the ETF's NAV
- CSEC regulation of mutual funds
- DThe ETF creation/redemption process involving authorized participants✓ Correct answer
Explanation
Why D — The ETF creation/redemption process involving authorized participants
The ETF creation and redemption process involving authorized participants helps arbitrage market prices back toward NAV. Exchange listing and daily NAV calculation alone do not perform that arbitrage function.
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