Which of the following statements most accurately describes a key difference between an Exchange Traded Fund (ETF) and a traditional open-ended mutual fund?

Question: Which of the following statements most accurately describes a key difference between an Exchange Traded Fund (ETF) and a traditional open-ended mutual fund?

Answer options: ✅ ETFs can be traded throughout the day on an exchange, while mutual funds are priced once daily at Net Asset Value (NAV).

• Mutual funds typically have lower Management Expense Ratios (MERs) than ETFs due to their larger asset bases.
• ETFs are always actively managed, whereas mutual funds are primarily passively managed.
• Mutual funds offer greater transparency regarding their portfolio holdings compared to ETFs.

Correct answer: ETFs can be traded throughout the day on an exchange, while mutual funds are priced once daily at Net Asset Value (NAV).

Explanation: ETFs trade like stocks on an exchange throughout the day, allowing for intra-day trading and pricing. Mutual funds are priced only once per day at the end-of-day NAV, and orders are executed at that single price.