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      Question

      Exchange-Traded Fund (ETF) is a basket of securities

      that can be traded on a stock exchange. In this regard, consider the following statements: 1. The return and risk on ETF are directly related to the underlying index or asset it tracks. 2. Bharat 22 is the first ETF launched by Finance ministry to speed up its disinvestment programme. 3. ETFs hold a portfolio of securities that replicates an index and are listed and traded on the stock exchange. Which of the above statements is/are correct?
      A 1 only Correct Answer Incorrect Answer
      B 2 only Correct Answer Incorrect Answer
      C 3 only Correct Answer Incorrect Answer
      D 1 and 2 Correct Answer Incorrect Answer
      E 1 and 3 Correct Answer Incorrect Answer

      Solution

      ETFs hold a portfolio of securities that replicates an index and are listed and traded on the stock exchange and its trading value is based on the net asset value of the underlying stocks that it represents. The return and risk on ETF are directly related to the underlying index like the BSE Sensex or asset like gold. Bharat 22 is not the first ETF launched by Finance Ministry. Ministry of Finance had launched Central Public Sector Enterprise Exchange Traded Fund (CPSE ETF) in 2014.

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