With reference to lsquo Exchange traded funds ETFs consider the following statements 1 They are list...........

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With reference to ‘Exchange-traded funds (ETFs), consider the following statements:

1. They are listed and traded on exchanges like stocks.

2. ETFs do not offer intraday purchases and sales on the Exchange.

Which of the statements given above is/are correct?

1 only

2 only

Both 1 and 2

Neither 1 nor 2

Explanation:

Solution. Exp: An ETF is a basket of stocks that reflects the composition of an Index, like S&P CNX Nifty or BSE Sensex. The ETFs trading value is based on the net asset value of the underlying stocks that it represents. Statement 1 is correct: Exchange Traded Funds are essentially Index Funds that are listed and traded on exchanges like stocks. Statement 2 is not correct: They provide liquidity for investors with a shorter-term horizon as they can trade intra-day and can have quotes near NAV during the trading day