Start learning →

An ETF share trades at a premium when its market price is:

Alower than the value of its underlying holdings
Bequal to the value of its underlying holdings
Chigher than the value of its underlying holdings
Dset once a year by the fund's investment adviser
Answer & Solution
Correct answer: C. higher than the value of its underlying holdings
1. An ETF has two values at once: the market price its shares trade at, and the value of its underlying holdings. 2. A premium means the market price sits above the value of those underlying holdings. 3. A market price below that value is a discount, which is the mirror case. 4. A history of end-of-day premiums and discounts is usually published on the website of the ETF or its sponsor. _Source: US SEC Office of Investor Education and Advocacy, "Mutual Funds and ETFs: A Guide for Investors", section How ETFs Work_
Practise this question with Quill — FINRA SIE →

Keep practising Investment Products and Risks

Browse all Investment Products and Risks questions for FINRA SIE, or explore more Finance topics.

Start a Investment Products and Risks lesson →
Related questions