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Question

Q. With reference to the Exchange traded fund (ETF), which of the following statements is/are correct?

Select the correct answer using the code given below:

A

1 only
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B

1 and 2 only
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C

2 and 3 only
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D

1, 2 and 3
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Solution

The correct option is D
1, 2 and 3
Explanation:

Statement 1 is correct:
It is a basket of securities that can be traded in stock exchange similar to ordinary shares.

Statement 2 is correct: Compared to mutual funds, ETFs have more liquidity and marketability, as they are tradable in stock exchange.

Statement 3 is correct: The Government of India has decided to use an ETF mechanism to disinvest the shares of public sector companies.

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