Exchange traded funds
A) are exactly the same as index mutual funds.
B) can be bought and sold like common stocks.
C) cannot be sold short.
D) have a high management fee.
E) cannot be timed for capital gain tax realizations.

Question

Quizplus · Accepted Answer

ETFs can be bought and sold like common stocks, which provides investors with greater flexibility in trading and can potentially lead to lower transaction costs. The other options are incorrect: A is false because ETFs and index mutual funds have some differences, such as how they are traded and priced; C is false because ETFs can be sold short; D is false because ETFs generally have lower management fees than mutual funds; and E is false because ETFs can be timed for tax realizations like any other investment.

Exchange Traded Funds