What is a key feature of ETFs regarding trading?

What is a key feature of ETFs regarding trading?

• A. They have fixed trading hours
• B. They can be purchased anytime during trading hours
• C. They are exclusively for institutional investors
• D. They require a broker to purchase

Answer: (B)

ETFs, or exchange-traded funds, are designed to be traded on stock exchanges throughout the trading day, similar to individual stocks. This allows investors to buy and sell shares of an ETF at any time during regular market hours. This flexibility is a significant characteristic of ETFs, as it enables investors to respond quickly to market fluctuations and make immediate trading decisions, unlike mutual funds, which only trade at the end of the trading day. The other options do not accurately represent key features of ETFs. Fixed trading hours are a characteristic of mutual funds rather than ETFs, which can be traded at any moment during trading hours. The idea that ETFs are exclusively for institutional investors is incorrect, as they are available to all types of investors, including individuals. Finally, while purchasing an ETF typically involves using a broker, the requirement to do so is not unique to ETFs, as many investment instruments require a broker for execution. Hence, the ability to purchase ETFs anytime during trading hours is a defining feature that sets them apart in the investment landscape.

ETFs, or exchange-traded funds, are designed to be traded on stock exchanges throughout the trading day, similar to individual stocks. This allows investors to buy and sell shares of an ETF at any time during regular market hours. This flexibility is a significant characteristic of ETFs, as it enables investors to respond quickly to market fluctuations and make immediate trading decisions, unlike mutual funds, which only trade at the end of the trading day.

The other options do not accurately represent key features of ETFs. Fixed trading hours are a characteristic of mutual funds rather than ETFs, which can be traded at any moment during trading hours. The idea that ETFs are exclusively for institutional investors is incorrect, as they are available to all types of investors, including individuals. Finally, while purchasing an ETF typically involves using a broker, the requirement to do so is not unique to ETFs, as many investment instruments require a broker for execution. Hence, the ability to purchase ETFs anytime during trading hours is a defining feature that sets them apart in the investment landscape.