Practice Quiz

FINRA Series 6

Category - Series 6

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Which of the following is not an advantage that an exchange traded fund (ETF) has over a traditional mutual fund?
  1. There are no fees (i.e., loads, commissions) associated with buying and selling ETFs.
  2. ETFs trade continuously throughout the day.
  3. Investors can use limit and stop orders when trading ETFs.
  4. All of the above are advantages that an ETF has over a traditional mutual fund.
Explanation
Answer: A - The choice that does not represent an advantage that an ETF has over a traditional mutual fund is Choice A. While ETFs have no load charges, investors do pay commissions when buying or selling these funds. ETFs do offer the advantage of continuous trading, and investors can use limit and stop orders when trading ETFs, options that are not available when trading mutual funds.
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