Canadian Securities Course (CSC) Practice Exam · Question
What is the main advantage of investing in an Exchange-Traded Fund (ETF) compared to a traditional mutual fund?
A key advantage of ETFs is their tradability on stock exchanges during market hours, providing liquidity and price transparency, unlike mutual funds which are p
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Question: What is the main advantage of investing in an Exchange-Traded Fund (ETF) compared to a traditional mutual fund?
Answer options:
- ETFs are actively managed and aim to outperform a benchmark. ✅ ETFs can be traded throughout the day on an exchange like a stock.
- ETFs never incur management expense ratios (MERs).
- ETFs guarantee capital protection.
Correct answer: ETFs can be traded throughout the day on an exchange like a stock.
Explanation: A key advantage of ETFs is their tradability on stock exchanges during market hours, providing liquidity and price transparency, unlike mutual funds which are priced once daily at Net Asset Value (NAV).
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