Returns on exchange traded funds may come from
I. capital gains.
II. dividends.
III. increases in the fund's premium.
IV. decreases in the fund's discount.

Question

Quizplus · Accepted Answer

Returns on exchange traded funds (ETFs) primarily come from capital gains and dividends. Capital gains occur when the value of the securities within the ETF increases, and dividends are distributions of a portion of the company's earnings to shareholders. Increases in the fund's premium or decreases in the fund's discount are not direct sources of returns but rather reflect market price fluctuations relative to the net asset value.

Returns on Exchange Traded Funds May Come from