Exercise #5


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

3.) You want to gain exposure to the Drug sector which has reversed up on its bullish percent chart. An examination of the stocks within the sector reveals that Pfizer (PFE) is on a relative strength sell signal and below the bearish resistance line. Which of the following ETFs would be the best choice for gaining exposure to the Drug sector?

Your answer was A. Sector SPDR Healthcare (XLV)

That is incorrect. While the XLV is concentrated in Drug stocks, there is a large exposure to PFE, a 12.14% weighting the second highest in the sector as a whole. Another drug sector ETF with exposure to drug sectors and a lower weighting in PFE would be more appropriate.

Go back to the question.