Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

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Multiple Choice

Which of the following best describes a key difference between an index fund and an exchange-traded fund (ETF)?

Index funds are only available to institutional investors, while ETFs are available to individual investors.

An ETF can only track actively managed portfolios, while index funds track market indexes.

An index fund is typically bought and sold at the end of the trading day at net asset value, while an ETF can be traded throughout the day at market prices.

An index fund always charges higher management fees than an ETF.

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Verified step by step guidance

Step 1: Understand the definitions of an index fund and an exchange-traded fund (ETF). An index fund is a type of mutual fund designed to replicate the performance of a specific market index, such as the S&P 500. ETFs, on the other hand, are investment funds traded on stock exchanges, similar to individual stocks, and can track indexes or other types of portfolios.

Step 2: Analyze the trading mechanisms of both investment types. Index funds are typically bought and sold at the end of the trading day at their net asset value (NAV), which is calculated based on the value of the underlying assets. ETFs, however, are traded throughout the day at market prices, which can fluctuate based on supply and demand.

Step 3: Evaluate the accessibility of these funds. Both index funds and ETFs are available to individual investors, not just institutional investors, so this statement is incorrect.

Step 4: Consider the management style. ETFs can track both actively managed portfolios and market indexes, while index funds are specifically designed to track market indexes. Therefore, the statement that ETFs can only track actively managed portfolios is incorrect.

Step 5: Assess the cost structure. While index funds and ETFs may have different fee structures, it is not universally true that index funds always charge higher management fees than ETFs. Fees depend on the specific fund and its management.