Q1. On March 19, 2020, the Australian Financial Review reported:  

UBS will de-list its Australian exchange-traded funds (ETFs) in a strategic retreat from the burgeoning market, as $2 billion was wiped from the industry's funds under management in February.

The Swiss banking giant has applied to the Australian Securities Exchange to have the trading status of its nine locally listed funds revoked. The total business unit has $442.2 million in assets under management, according to UBS data.

It intends to convert three of the funds - the UBS IQ MSCI World ex Australia Ethical ETF, UBS IQ MSCI Asia APEX 50 Ethical ETF and UBS IQ MSCI Australia Ethical ETF - into unlisted managed funds and keep hold of existing investors.

1. What is the main reason for de-listing ETFs?

Select one:

A. The investors are no longer interested in fixed income instruments

B. UBS is no longer interested in holding stock indices given the toughest competition in the market.

C. The returns of ETFs are large, and therefore UBS prefers to limit the participation.

D.UBS prefers on-line delivery of goods

Q2.In a market with high volatility and uncertainty that deters participants from trading, which statement do you think is correct?

Select one:

A. The Authorised Participants now have easier time to find securities in the market.

B. The Authorised Participants now have a harder time to track the index.

C. The high volatility of the underlying asset does not imply higher risk in the economy, therefore the demand for stocks ETFs is not affected.

D. The high volatility of the underlying assets does not affect the index ETF since the index captures the systemic risk.

Q3.In the ETF market, all investors can exchange the ETF shares against the underlying securities.

Select one:

A. True if NAV is computed properly

B. True, all investors can create/redeem shares

C. False, only the Authorised participants can create/redeem shares

Answer rating: 100% (QA)

The detailed answer for the above question is provided below Answers to your questions Q1 The main reason for delisting ETFs The most likely reason fo... View the full answer