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Within what period must ETF and mutual fund shares traded through a broker settle?
ATwo business days
BOne business day
CSeven business days
DTen business days
Answer & Solution
Correct answer: A. Two business days
1. Settlement is the point at which a completed trade is finally exchanged for cash.
2. Shares of both ETFs and mutual funds traded through a broker must settle in two business days.
3. The rule is the same for both products, so the wrapper does not change the settlement period.
4. Seven days is a different obligation: it is the outer limit for a mutual fund to send payment for redeemed shares.
_Source: US SEC Office of Investor Education and Advocacy, "Mutual Funds and ETFs: A Guide for Investors", section Common Features of Mutual Funds and ETFs_
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