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Consider the following statements regarding Exchange Traded Funds (ETF).
1. ETFs are passive funds listed and traded on stock exchanges like shares.
2. In an ETF, one can buy and sell units at prevailing market price on a real time basis during market hours.
3. Here the fund manager selects stocks based on customers choice.
Which of the above statements is/are correct?
- a)1, 2
- b)1 only
- c)1, 3
- d)1, 2, 3
Correct answer is option 'A'. Can you explain this answer?
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Most Upvoted Answer
Consider the following statements regarding Exchange Traded Funds (ETF...
Exchange Traded Funds (ETFs):
- Typically, an ETF mirrors a particular index, which means the group of stocks in the ETF would be similar to those in the index that it is benchmarked to.
- They are traded on stock exchanges like shares.
- Usually, ETFs are passive funds where the fund manager doesn’t select stocks on your behalf. Instead, the ETF simply copies an index and endeavours to accurately reflect its performance.
- In an ETF, one can buy and sell units at prevailing market price on a real time basis during market hours.
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Community Answer
Consider the following statements regarding Exchange Traded Funds (ETF...
Explanation:
Statement 1: ETFs are passive funds listed and traded on stock exchanges like shares.
- This statement is correct. ETFs are investment funds that are traded on stock exchanges, just like shares. They are designed to track the performance of a specific index or asset class. Unlike mutual funds, ETFs are traded throughout the day at market prices that may be different from the net asset value (NAV) of the underlying assets.
Statement 2: In an ETF, one can buy and sell units at prevailing market price on a real-time basis during market hours.
- This statement is correct. ETFs can be bought and sold on stock exchanges at any time during market hours, just like shares. The price of an ETF is determined by the supply and demand in the market and may trade at a premium or discount to the NAV of the underlying assets.
Statement 3: Here the fund manager selects stocks based on customer's choice.
- This statement is incorrect. ETFs are passive funds, which means they are designed to track the performance of a specific index or asset class. The composition of the ETF is determined by the index it is tracking, not by the fund manager based on customer preferences. The fund manager's role in an ETF is to replicate the index by buying the same securities in the same proportion as the index.
Conclusion:
Only statements 1 and 2 are correct. ETFs are passive funds listed and traded on stock exchanges like shares, and investors can buy and sell units at prevailing market prices on a real-time basis during market hours. Statement 3 is incorrect as the fund manager does not select stocks based on customer choice in an ETF.
Statement 1: ETFs are passive funds listed and traded on stock exchanges like shares.
- This statement is correct. ETFs are investment funds that are traded on stock exchanges, just like shares. They are designed to track the performance of a specific index or asset class. Unlike mutual funds, ETFs are traded throughout the day at market prices that may be different from the net asset value (NAV) of the underlying assets.
Statement 2: In an ETF, one can buy and sell units at prevailing market price on a real-time basis during market hours.
- This statement is correct. ETFs can be bought and sold on stock exchanges at any time during market hours, just like shares. The price of an ETF is determined by the supply and demand in the market and may trade at a premium or discount to the NAV of the underlying assets.
Statement 3: Here the fund manager selects stocks based on customer's choice.
- This statement is incorrect. ETFs are passive funds, which means they are designed to track the performance of a specific index or asset class. The composition of the ETF is determined by the index it is tracking, not by the fund manager based on customer preferences. The fund manager's role in an ETF is to replicate the index by buying the same securities in the same proportion as the index.
Conclusion:
Only statements 1 and 2 are correct. ETFs are passive funds listed and traded on stock exchanges like shares, and investors can buy and sell units at prevailing market prices on a real-time basis during market hours. Statement 3 is incorrect as the fund manager does not select stocks based on customer choice in an ETF.
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Consider the following statements regarding Exchange Traded Funds (ETF).1. ETFs are passive funds listed and traded on stock exchanges like shares.2. In an ETF, one can buy and sell units at prevailing market price on a real time basis during market hours.3. Here the fund manager selects stocks based on customers choice.Which of the above statements is/are correct?a)1, 2b)1 onlyc)1, 3d)1, 2, 3Correct answer is option 'A'. Can you explain this answer?
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Consider the following statements regarding Exchange Traded Funds (ETF).1. ETFs are passive funds listed and traded on stock exchanges like shares.2. In an ETF, one can buy and sell units at prevailing market price on a real time basis during market hours.3. Here the fund manager selects stocks based on customers choice.Which of the above statements is/are correct?a)1, 2b)1 onlyc)1, 3d)1, 2, 3Correct answer is option 'A'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements regarding Exchange Traded Funds (ETF).1. ETFs are passive funds listed and traded on stock exchanges like shares.2. In an ETF, one can buy and sell units at prevailing market price on a real time basis during market hours.3. Here the fund manager selects stocks based on customers choice.Which of the above statements is/are correct?a)1, 2b)1 onlyc)1, 3d)1, 2, 3Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements regarding Exchange Traded Funds (ETF).1. ETFs are passive funds listed and traded on stock exchanges like shares.2. In an ETF, one can buy and sell units at prevailing market price on a real time basis during market hours.3. Here the fund manager selects stocks based on customers choice.Which of the above statements is/are correct?a)1, 2b)1 onlyc)1, 3d)1, 2, 3Correct answer is option 'A'. Can you explain this answer?.
Consider the following statements regarding Exchange Traded Funds (ETF).1. ETFs are passive funds listed and traded on stock exchanges like shares.2. In an ETF, one can buy and sell units at prevailing market price on a real time basis during market hours.3. Here the fund manager selects stocks based on customers choice.Which of the above statements is/are correct?a)1, 2b)1 onlyc)1, 3d)1, 2, 3Correct answer is option 'A'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements regarding Exchange Traded Funds (ETF).1. ETFs are passive funds listed and traded on stock exchanges like shares.2. In an ETF, one can buy and sell units at prevailing market price on a real time basis during market hours.3. Here the fund manager selects stocks based on customers choice.Which of the above statements is/are correct?a)1, 2b)1 onlyc)1, 3d)1, 2, 3Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements regarding Exchange Traded Funds (ETF).1. ETFs are passive funds listed and traded on stock exchanges like shares.2. In an ETF, one can buy and sell units at prevailing market price on a real time basis during market hours.3. Here the fund manager selects stocks based on customers choice.Which of the above statements is/are correct?a)1, 2b)1 onlyc)1, 3d)1, 2, 3Correct answer is option 'A'. Can you explain this answer?.
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