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Question
Q. With reference to Gold Exchange Traded Funds, consider the following statements:
Select the correct answer using the codes given below:
Q. With reference to Gold Exchange Traded Funds, consider the following statements:
Select the correct answer using the codes given below:
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Solution
The correct option is B 1 and 3 only
Explanation:
- Statement 1 is correct: Gold Exchange Traded Funds (Gold ETFs) are funds that primarily invest in gold and can be bought and sold on the exchange. Gold ETFs are essentially open-ended mutual fund schemes that are based on ever-fluctuating gold prices.
- Statement 2 is incorrect: Exchange-traded funds represent assets, in this case, physical gold, both in dematerialized and paper form. An investor invests in stocks instead of the actual metal, and once it is traded, they are credited with the unit’s equivalent in cash instead of actual gold.
- Statement 3 is correct: Each unit of these traded funds represents 1 gram of 99.5% pure gold, which makes them ideal long-term investments, especially if an individual opts to invest larger sums or performs trade systematically.
Explanation:
- Statement 1 is correct: Gold Exchange Traded Funds (Gold ETFs) are funds that primarily invest in gold and can be bought and sold on the exchange. Gold ETFs are essentially open-ended mutual fund schemes that are based on ever-fluctuating gold prices.
- Statement 2 is incorrect: Exchange-traded funds represent assets, in this case, physical gold, both in dematerialized and paper form. An investor invests in stocks instead of the actual metal, and once it is traded, they are credited with the unit’s equivalent in cash instead of actual gold.
- Statement 3 is correct: Each unit of these traded funds represents 1 gram of 99.5% pure gold, which makes them ideal long-term investments, especially if an individual opts to invest larger sums or performs trade systematically.
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