Understanding ETFs in Passive Equity Investing

Easy Passive Equity Investing Exchange-traded Funds

Consider the following scenario: An investor is looking for a cost-effective way to gain exposure to the U.S. equity market without having to actively manage a portfolio. The investor is particularly interested in using an investment vehicle that provides liquidity and can be traded easily throughout the trading day. In this context, the investor is contemplating using an Exchange-Traded Fund (ETF).

Which of the following statements about ETFs is most accurate for this investment strategy?

ETFs typically have higher expense ratios compared to mutual funds, making them a more expensive option.

ETFs can be bought and sold throughout the trading day at market prices, similar to individual stocks.

ETFs usually require a minimum investment amount, limiting their accessibility to all investors.

Hint

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