Practice Quiz

FINRA Series 6

Category - Series 6

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An exchange-traded fund (ETF):
  1. can be structured as either a mutual fund or a unit investment trust.
  2. is a type of closed-end investment company.
  3. is bought and sold at the net asset value of the fund.
  4. charges no management fees.
Explanation
Answer: A - An exchange-traded fund (ETF) can be structured as either a mutual fund or a unit investment trust, which means it is not a type of closed-end company. Shares are bought and sold on exchange floors, just as shares of a closed-end company are, however. Therefore, the price of an ETF is set by supply and demand, so an ETF can not necessarily be bought and sold at its net asset value. Like their cousins, ETFs charge management fees.
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