Exercise #5


Utilizing the information on Exchange Traded Funds (ETFs), answer the following questions.

2.) Examination of the Top Ten Holdings of any ETF is important because for most ETFs, the top ten holdings influence about half of the movement of the ETF.

Your answer was B. False


That is incorrect. As a general rule, and this is especially the case with the capitalization weighted ETFs, the top ten holdings account for about 50% of the movement of the ETF. Therefore, an examination of those holdings is important to determine the overall risk of owning that ETF.

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