An exchange traded fund (ETF) is a security that represents a portfolio of individual stocks. Consider an ETF for which each share represents a portfolio of two shares of International Business Machines (IBM), three shares of Merck (MRK), and three shares of Citigroup Inc. (C). Suppose the current market price of each individual stock are shown below: Stock Current Price IBM $128.92 MRK $71.75 C $64.62 Suppose that the ETF is trading for $666.95; you should: a. buy the EFT and sell 2 shares of IBM, 3 shares of MRK, and 3 shares of C. b. sell the EFT and buy 3 shares of IBM, 2 shares of MRK, and 3 shares of C. c. sell the EFT and buy 2 shares of IBM, 3 shares of MRK, and 3 shares of C. d. do nothing, no arbitrage opportunity exists. e. buy the EFT and sell 2 shares of IBM, 2 shares of MRK, and 3 shares of C.

An exchange traded fund (ETF) is a security that represents a portfolio of individual stocks. Consider an ETF for which each share represents a portfolio of two shares of Apple Inc. (APPL), one share of Google (GOOG), and ten shares of Microsoft (MSFT). Suppose the current stock prices of each individual stock are as shown below: Stock Price APPL $200.23 GOOG $570.51 MSFT $29.61 If the ETF is currently trading for $1200, what arbitrage opportunity is available? What trades would you make? a. sell one EFT and buy 2 shares of APPL, 3 shares of GOOG, and 10 shares of Microsoft. b. buy one EFT and sell 2 shares of APPL, 10 shares of GOOG, and 1 share of Microsoft. c. sell one EFT and buy 3 shares of APPL, 2 shares of GOOG, and 10 shares of Microsoft. d. do nothing, no arbitrage opportunity exists. e. buy one EFT and sell 2 shares of APPL, 1 share of GOOG, and 10 shares of Microsoft.

Multiple Choice QuestionWhat is a benefit of an exchange-traded fund?Multiple choice question.similar to checking accounthighest available interest ratelow management feesminimum $50,000 investment

How do ETFs trade on the stock exchange?(1.0 Marks)Like BondsALike Mutual FundsBLike Common StocksCLike Real Estate Properties

HOW DO YOU BUY ETFS? Like a mutual fund, trading at the end of the day Like a stock, with the price constantly updating Like a bond, you can buy and sell at any time but it eventually expires You can only buy ETFs at their Initial Public Offering (IPO)WHAT IS AN INDEX ETF? An ETF that tracks a stock index, like the S&P 500 An ETF that is based on a commodity, like gold A place where ETFs are listed ETFs that are all created by the same companyWHO WOULD BE THE MOST LIKELY TO BUY AN INVERSE ETF? An investor who thinks Apple stock will go down in value An investor who wants to buy gold An investor who wants double or triple the daily return of an index An investor who normally is not able to short-sell in their portfolioWHO WOULD BE THE LEAST LIKELY TO BUY A LEVERAGED ETF? An investor who thinks a big price spike is coming soon An investor who thinks the underlying index will slowly go up over time An investor who wants to invest in oil An investor who day tradesWHICH OF THESE IS DIFFERENT BETWEEN ETFS AND MUTUAL FUNDS? ETFs hold a wide basket of stocks instead of just a few ETFs are much older than mutual funds ETFs usually have lower fees than mutual funds ETFs will never pay out the dividends of underlying stocks, but mutual funds will

For the exchange-traded fund, explain the issues of: i. Market volatility affecting performance ii. Fees associated with management and exchanges iii. Dividends impacting the fund