An ETF arbitrage mechanism keeps which two values close?
AMarket price and net asset value
BManagement fee and expense ratio
CFront load and exit fee levels
DDividend yield and interest rate
Answer & Solution
Correct answer: A. Market price and net asset value
Creation and redemption let arbitrageurs keep the traded price close to the NAV of the underlying assets.
Keep practising Mutual Funds
Browse all Mutual Funds questions for CA Final, or explore more Strategicfinancialmanagement topics.
Related questions
What risk can arise when an ETF tracks assets using futures and swaps?Replication in an index ETF means doing what?Who creates and redeems ETF shares directly with the issuer in large blocks?How does an ETF share differ from an open-end mutual fund unit?What is mismarking in securities valuation?How often are a fund's investments valued for NAV?How many units does a $50,000 investment buy in a no-load fund at NAV of $25?A fund has NAV of $300 million and 2 million units. How many units does a $30 million inve