Question

an exchange traded fund ( ETF) is

Answer 1

Exchange traded funds (ETFs) are financial instruments which mimics the performance index which it tracks. ETF are similar to mutual funds but unlike mutual funds, ETF can be bought and sold on exchange just like any other common stock. As mentioned above, most of the ETFs track stock indexes, but there are some ETFs which invest currencies, bonds and commodity market etc.

There are 2 types of ETF: Open ended funds and Close ended funds

Shares of Open-ended funds are traded based on their net asset value or NAV. The value of the security is calculated daily at the end of the day.

On the other hand, there is only fixed number of shares which are traded between investors in Close-ended funds. Close ended funds are traded in the market and it can be at discount or premium

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