Question #20
Reading: Reading 35 Exchange-Traded Funds - Mechanics and Applications
PDF File: Reading 35 Exchange-Traded Funds - Mechanics and Applications.pdf
Page: 6
Status: Incorrect
Correct Answer: B
Your Answer: B
Question
It would be most accurate to state that ETF shares can be created or redeemed by:
Answer Choices:
A. anyone, including individual investors using a brokerage account
B. a special group of institutional investors (APs) only
C. accredited investors (i.e. qualified investors) only
Explanation
The only investors who can create or redeem new ETF shares are a special group of
institutional investors called authorized participants. ETFs' creation/redemption
mechanism allows for the continuous creation and redemption of ETF shares.