SIE Exam Question 901: Answer and Explanation

Question: 901

All but which of the following are characteristics of exchange-traded funds (ETFs)?

• A. They are traded on an exchange like individual securities.
• B. Their trades settle at the end of the trading day, similar to mutual funds.
• C. They have lower expenses than mutual funds.
• D. They are income tax efficient.

Correct Answer: B

Explanation:

Exchange-traded funds (ETFs) may be bought or sold throughout the trading day like individual securities. They have lower expenses than mutual funds and are income tax efficient.