What are the differences between an ETF and a mutual fund?
A)An ETF can be traded like a share of common stock.
B)An ETF can be purchased on margin or sold short like a share of common stock.
C)An ETF is more tax-efficient than most mutual funds.
D)All of the above are correct.
E)Only A and C are correct.

Question

Quizplus · Accepted Answer

All of the options are correct. ETFs can be traded like stocks, can be purchased on margin or sold short like stocks, and are generally more tax-efficient than mutual funds. Mutual funds can only be bought or sold at the end of the trading day at the net asset value (NAV), while ETFs can be bought or sold throughout the trading day at market prices. Therefore, ETFs have additional flexibility and also offer the ability to trade on margin or short sell, which is not available in mutual funds.

What Are the Differences Between an ETF and a Mutual