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Q. With reference to the Exchange traded fund (ETF), which of the following statements is/are correct?
  1. It is a basket of securities that can be traded in stock exchange similar to ordinary shares.
  2. Compared to mutual funds, ETFs have more liquidity and marketability.
  3. The Government of India has decided to use an ETF mechanism to disinvest the shares of public sector companies.
Select the correct answer using the code given below:

  1. 1 only

  2. 1 and 2 only

  3. 2 and 3 only

  4. 1, 2 and 3


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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