Question
An Exchange-Traded Fund (ETF) is a security that represents a portfolio of individual stocks. Consider an ETF for which each share represents a portfolio of
An Exchange-Traded Fund (ETF) is a security that represents a portfolio of individual stocks. Consider an ETF for which each share represents a portfolio of two shares of TradeMe (TME), two shares of Air New Zealand (AIR), and four shares of Kiwi Property Group (KPG). Suppose the current stock prices of each stock are as shown here:
TME: $34 per share
AIR: $42 per share
KPG: $16 per share
One share of ETF currently trades at $200. Which of the following about the ETF is correct?
A. | The ETF is currently fairly priced | |
B. | The ETF is currently overpriced | |
C. | It is hard to say if the ETF is overpriced or underpriced | |
D. | The ETF is currently underpriced |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started