SIE practice questionmediumETF Risks
Which one is a unique risk associated with exchange-traded funds (ETFs) compared to mutual funds?
- AEarly redemption penalties
- BManagerial risk due to active management
- CGuaranteed returns
- DPotential for trading at a price away from NAV✓ Correct answer
Explanation
Why D — Potential for trading at a price away from NAV
A is correct; ETFs may trade at premiums or discounts to NAV, unlike mutual funds. B is not unique since not all ETFs are actively managed. C is false—returns are not guaranteed. D is not a usual ETF risk.
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