Question: Why does arbitrage virtually assure that an ETF will sell for its asset value?

Why does arbitrage virtually assure that an ETF will sell for its asset value?

Step by Step Solution

★★★★★

3.33 Rating (168 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

ETFs may bought and sold including selling short If the net value were to dev... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Document Format (1 attachment)

Word file Icon

124-B-A-I (1739).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

Q:

Why is the concept of arbitrage central to the asset pricing mechanism of APT?

Q:

Why does boring assure concentricity between the hole axis and the axis of rotation of the workpiece (for boring tool), whereas drilling does not?

Q:

Why would an organization choose to sell an asset and then lease it back?

Q:

Why does arbitrage virtually assure that an ETF will sell for its asset value?

Q:

Why does arbitrage virtually assure that an ETF will sell for its net asset value?

Q:

Using the information on the taxation of REIT distributions, what was the tax status of recent annual distributions made by Plum Creek Timber (PCU), UDR, and WRE? Why does arbitrage virtually assure...

Q:

PART TWO nvestm What differentiates a mortgage from an ing, developing, and owning properties vestments in real estate propenrmation distribution at was th tax status of the RET (POU,UDR R),an...

Q:

85. Two firms that are virtually identical except for their capital structure are selling in the market at different values. According to M&M a) one will be at greater risk of bankruptcy. b) the firm...

Q:

1.Two firms that are virtually identical except for their capital structure are selling in the market at different values. According to Modigliani and Miller (M&M) a. One will be at greater risk of...

Q:

Two firms that are virtually identical except for their capital structure are selling in the market at different values. According to M\&M in its pure form: one will be at greater risk of bankruptcy...

Q:

RocketOwl, Inc. is considering a new product to bring to market. They estimate the product would have a viable market for five years. If they wish to do the project they will need to purchase...

Q:

(a) By using the binomial expansion, or otherwise, express (1 + 2x) in the form 1+ ax + bx + cx + 16x where a, b and c are integers. (b) Hence show that (1+2x)+(1-2x) = 2 + 48x + 32. (c) Hence show...

Q:

18. In the figure below, AB and CD are chords of the circle with centre O. The point Plies on AB such that AP = BP and the point Q lies on CD such that OQ is perpendicular to CD. Given that AB = 22...

Q:

Master Mfg., Inc. contracted with Accur Computer Repair Corp. to maintain Masters computer system. Masters manufacturing process depends on its computer system operating properly at all times. A...

Q:

Fluctuations in exchange rates __________ the risk associated with global mutual funds.

Q:

You purchase stock in a closed-end investment company for $25. The net asset value (NAV) of the shares is $26.50. You receive distributions of $1.00 and sell the shares for $30 when the net asset...

Q:

You purchase 100 shares of stock in a real estate investment trust (REIT) for $46 ($4,600). You receive distributions of $2.00 a share consisting of $0.70 in ordinary income, $0.30 in long-term...

Q:

Consider the two mutually exclusive investment alternatives given in the table below. Which project would be selected based on the rate of return decision criterion?(Assume that MARR=10%) The IRR on...

Q:

A project that provides annual cash flows of $16,600 for eight years costs $72,000 today. What is the NPV for the project if the required return is 7 percent? (Do not round intermediate calculations....

Q:

MULTIPLE CHOICE (1 point each). 1. As part of a database on new births at a hospital, some variables recorded are the age of the mother, marital status of the mother (single, married, divorced), the...