Lessons: Chapter 15 - Exchange Traded Funds
You can get exchange traded fund information on many financial websites. We often use the following sites :
Article on expense ratios: Expense Ratios
ETF Basics: ETF 101
Varieties of ETFs: Why You Should Avoid Offbeat ETFs and Stick to Investing Basics
15.1: Exchange traded funds has the which of the following characteristics
Exchange traded funds represent a diversified group of companies (just like mutual funds) but trade like stocks
Exchange traded funds are just like mutual funds in that their prices are valued once a day
The initial investment in exchange traded funds can be over $1000 just like mutual funds
15.2: True or False. Exchange traded funds are also called index shares.
15.3: True or False. Most exchange traded funds trading in the market are index based.
15.4: True or False. Some exchange traded funds are designed to track specific market sectors such as: mining, petroleum, and gaming.
15.3: Which one of the items below is not an advantage associated with buying exchange traded funds:
They are a good way to hold diversified stocks without having to diversify on your own.
They generally charge lower annual expense ratios than mutual funds.
They have lower capital gains taxes, as the funds generally do not do much trading and therefore capital gains are minimal.
They are only traded once at the end of the day unlike stocks which can be traded all day long
Their initial investment amount can be less than $100, as opposed to an index mutual fund’s investment minimum that's generally around $2,500.
15.4: Log into MarketWatch and enter the exchange traded fund , SPY, in the search box. SPY is the SPDR S&P 500 exchange traded fund that tracks the S&P 500 index. What is the price of a share of the exchange traded fund?