Financial Industry Regulatory Authority (FINRA) Practice Exam 2026 - Free FINRA Practice Questions and Study Guide

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In the context of investments, what does the acronym ETF stand for?

Exchange-Traded Fund

The acronym ETF stands for Exchange-Traded Fund. An ETF is a type of investment fund that is traded on stock exchanges, much like individual stocks. They hold a collection of assets, which could include stocks, bonds, or commodities, and they aim to track the performance of a specific index or asset class.

ETFs offer several advantages, including diversification, liquidity, and lower expense ratios compared to traditional mutual funds. Investors can buy and sell ETF shares throughout the trading day at market prices, offering greater flexibility and transparency to investors compared to other investment vehicles.

Understanding the nature of ETFs is essential for anyone looking to engage in modern investing, as they have become increasingly popular due to their efficiency and flexibility in reflecting the performance of broader markets without the need to buy each individual asset directly.

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Enhanced Trading Facility

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