Sample Exam Questions

A characteristic of ETFs structured as Unit Investment Trusts (UITs) is that they:
  • Have an indefinite life
  • Have a termination date
  • Do not trade intraday on an exchange
  • Distribute dividends immediately
If the unleveraged index of a 2x daily leveraged ETF gained 8% on Day 1 and then declined 10% on day two, the overall loss for the leveraged fund over the two trading days is:
  • 2.8%
  • 4%
  • 7.2%
  • 14.6%
ETNs have all of the following characteristics except:
  • Their returns are linked to the return of a market benchmark
  • They can be shorted
  • They distribute dividends and other distributions from a benchmarked index
  • They trade on stock exchanges
Which of the following statements is true regarding ETFs?
  • Individual investors have the ability to purchase and redeem ETF shares directly from the ETF provider in creation units
  • The creation and redemption of ETFs is generally regarded as “in-kind” exchanges of assets
  • They sell or redeem their individual shares at net asset value
  • All of the above
When large blocks of ETF shares are redeemed, individual underlying holdings:
  • With the highest cost basis are typically provided to the redeemer
  • With the lowest cost basis are typically provided to the redeemer
  • With the highest cost basis are exchanged for holdings with the lowest cost basis by the redeemer
  • With the lowest cost basis are exchanged for the shares with the highest cost basis by the redeemer