Which of the following orders is most likely to to increase the difference between the highest bid price and the lowest ask price?

(a) A large limit order

(b) A small limit order

(c) A small market order

(d) A large market order

(e) There will be no major difference between these

3. Which of the following are reasons an investor would have to pay more than the NAV for purchasing the share of an ETF? Select all that apply (e.g., If both A and B are correct, mark AB on the answer key)

(a) The ETF can be slightly overvalued before the authorized participant arbitrages the difference

(b) In theory, a share of an ETF should be worth more than NAV

(c) There is a bid-ask spread for ETFs

(d) Funds are not required to issue and redeem ETF shares for NAV

(e) None of the above

4. Which of the following are reasons that stocks are more likely to trade on exchanges relative to bonds? Select all that apply (e.g., If both A and B are correct, mark AB on the answer key) (a) Stocks from a given company are near perfect substitutes, while different bonds from the same company are not. This facilitates trading in a central location like an exchange

(b) Different bonds from a given company are near perfect substitutes, while different shares of stock from the same company are not. Exchanges work well when assets are not close substitutes

(c) Stocks are used in more sophisticated strategies than bonds are, and sophisticated investors trade on exchanges.

(d) Dealers buy and sell stock, and dealers only operate in exchanges.

(e) None of the above

5. Which of the following is not a benefit mutual funds provide for their shareholders?

(a) Diversification

(b) Record keeping and administration

(c) Economizing on transaction costs

(d) The ability to trade continuously throughout the day

(e) None of the above