CFA Level I · CFA Level I Exam · Portfolio Management: An Overview
Which of the following best describes a key difference between a mutual fund (open-end fund) and an exchange-traded fund (ETF)?
ETF shares trade on an exchange during the trading day at market prices, whereas open-end mutual fund shares are bought and redeemed with the fund at the end-of-day net asset value. The other options reverse these pricing and trading mechanics.
- AETF shares trade intraday on an exchange at market prices, while mutual fund shares are bought and sold at net asset valueCorrect
- BMutual fund shares trade on an exchange throughout the day, while ETF shares are priced once daily
- CETF investors always deal directly with the fund manager to redeem shares at NAV
Explanation
Open-end mutual fund shares are issued and redeemed with the fund at end-of-day NAV. ETF shares trade on an exchange throughout the day at market prices, which may differ slightly from NAV. The other statements reverse or misstate this.
Did you get it right without looking?
One question tells you little. A timed set on Portfolio Management: An Overview shows your real accuracy, how long you take and where you lose marks.
More Portfolio Management: An Overview questions
- An investment firm manages assets for pension funds and sovereign wealth funds and does not offer products to individual savers. This firm i…
- Which task is most likely part of the execution step of the portfolio management process?
- A client's IPS specifies a required return of 6.0% annually, with inflation expected at 2.5% and a spending need of 3.0% of assets per year.…
- A manager's portfolio has a strategic allocation of 60% equities and 40% bonds. After a market rally, the portfolio is 68% equities and 32% …
- Which of the following return objectives is best described as a well-constructed return objective in an IPS?
- A client has a high willingness to take risk but a low ability to take risk because of large near-term spending obligations. The adviser sho…