CFA Practice Question

There are 294 practice questions for this study session.

CFA Practice Question

Which of the following least accurately completes the following sentence? ETFs are generally more tax efficient than open-end funds ______

I. due to the way they are structured legally.
II. because investors can choose the timing of recognition for capital gains and losses.
III. because investors are not subject to involuntary distributions due to trading by other investors.
IV. because dividends are immediately reinvested.
Correct Answer: IV

The others are all reasons why ETFs are considered relatively more tax efficient than open-end funds. Immediate reinvestment of dividends may improve performance, but it is not related to tax considerations.

User Contributed Comments 4

User Comment
magicchip aargh... again, must read questions carefully.
Hervz Lol.. me too
khalifa92 Sometimes you choose an answer cause subconsciously you relate to it.
joeclark I remember that Cap G/L does not matter for ETF. Kindly check.
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