What is an ETF? Understand the basket behind a share: test your skills
An exchange-traded fund holds a basket of investments and trades on an exchange like a single share. Answer each question to see the explanation; your score appears at the end.
This test checks that you can
- Explain what an ETF holds
- List what to check before buying one
- Recognise narrow versus broad ETFs
- Practice
1. An ETF share gives you…
- Practice
2. ETFs trade…
- Practice
3. A narrow theme ETF can be…
- Key idea
4. Which statement best explains "A basket in one share"?
- Key idea
5. Which statement best explains "Names can mislead"?
- Key idea
6. Which statement best explains "Costs compound too"?
- Action plan
7. In the action plan, which step comes first?
- Mistake to avoid
8. Which of these is a mistake this lesson warns against?
- Mistake to avoid
9. Which of these is a mistake this lesson warns against?
You invest $12,000 in an ETF with a 0.25% expense ratio. What is the yearly cost?
Show the answer
$30
$12,000 × 0.0025 = $30.
Find any broad ETF’s fact sheet and note its expense ratio and number of holdings.
More tests in this bootcamp
- See how compound interest builds over time
- Understand index funds, diversification and fees
- What is an ETF? Understand the basket behind a share
- Compare ETFs and mutual funds without the jargon
- Understand the S&P 500 and what it leaves out
- Explore total market funds and check the overlap
- Understand international diversification and currency risk
- Look beyond the story of a sector or thematic fund
- Understand a three-fund portfolio and rebalancing
- Learn dollar-cost averaging: a schedule instead of market timing
- Final exam: Funds and portfolios