CHAPTER 12

 

Exchange-Traded Funds

Exchange-traded funds (ETFs) are baskets of stocks or bonds that track a broad-based index, sector of an index, or stocks in countries. ETFs are similar to closed-end funds in that investors buy these listed shares on the stock exchanges. The predominant listings are on the American Stock Exchange (AMEX). These shares represent ownership in a portfolio of stocks or bonds that track a broad index or sector indices. Investors buy or sell these shares through brokers, just as they do individual stocks. ETFs are priced based on the types of securities they hold, in addition to the supply of and demand for the shares. These shares can be sold short or bought in margin accounts, and they can be traded using market, ...

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