Question

An exchange traded fund refers to ___________.

• A. A stock that tracks the exchange rate of the country
• B. A stock that the tracks an index, a commodity, bonds or basket of assets.
• C. A stock whose value depends upon the level of foreign exchange reserves of the country
• D. None of the above

Answer 1

The correct option is B A stock that the tracks an index, a commodity, bonds or basket of assets.

ETF is similar to mutual fund which is traded on stock exchanges, much like stocks. They comprise a portfolio of equity, bonds and generally trade close to its net asset value (with occasional deviations). These funds mainly track an index, a commodity, or a pool of assets.