Which of the following characteristics apply to exchange traded funds (ETF's)?
I.unlimited number of outstanding shares
II.typically track the performance of some index
III.market prices may be higher or lower than NAV
IV.may invest in the whole index or use a sample of securities to track the index as closely as possible

Question

Quizplus · Accepted Answer

I applies to ETFs as they have an unlimited number of outstanding shares. II is another characteristic as ETFs typically track the performance of some index. III also applies as the market prices of ETFs can be higher or lower than NAV. IV is a valid characteristic of ETFs as they may invest in the whole index or use a sample of securities to track the index as closely as possible.

Which of the Following Characteristics Apply to Exchange Traded Funds