Investment company shares that trade on stock exchanges just like common stock and are essentially funds that mimic some index are

Question

Quizplus · Accepted Answer

Exchange traded funds (ETFs) are investment funds that are traded on stock exchanges, similar to common stocks. They are designed to track an underlying index, such as the S&P 500 or NASDAQ, and provide investors with exposure to a diversified portfolio of securities at a lower cost than traditional mutual funds. Option A (open-end mutual funds) and option E (index mutual funds) are also types of funds that mimic an index, but they are not traded on stock exchanges. Option C (money market funds) are not designed to mimic an index and invest in low-risk, short-term debt securities. Option D (load funds traded on stock exchanges) are mutual funds that charge a sales fee, which is not applicable to ETFs.

Investment Company Shares That Trade on Stock Exchanges Just Like