- CFA Exams
- CFA Level I Exam
- Topic 9. Portfolio Management
- Learning Module 61. Portfolio Management: An Overview
- Subject 5. Pooled Investments
CFA Practice Question
The major difference between an index mutual fund and an ETF is that ______
A. ETF investors buy fund shares directly from the ETF fund.
B. ETF investors can purchase shares on margin.
C. ETFs often reinvest dividends.
Explanation: A. An ETF investor buys ETF shares from other investors.
B. They can short shares too.
C. The dividends are paid out to the shareholders.
B. They can short shares too.
C. The dividends are paid out to the shareholders.
User Contributed Comments 2
| User | Comment |
|---|---|
| clipp | One thing to note, Mutual Funds are marginable after holding for a period of time but not immediately marginable. |
| cwong2013 | wait.. with regards to mutual funds- where you are investing in a portfolio which replicates an index, why can't you use a margin account where you borrow to invest in this fund/vehicle? Sorry if this is a stupid question- just didn't realise this. |