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 |
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Financial Markets And Institutions
Authors: Anthony Saunders, Marcia Cornett
5th Edition
0078034663, 978-0078034664
