如题

问题如下：

As ETF shares may trade at prices that are different from the NAV, Rutledge examines selected data in Exhibit 2 for three ETFs that might have this problem.

Which ETF in Exhibit 2 is most likely to trade at the largest premium or discount relative to NAV?

选项：

A.

ETF 5

B.

ETF 6

C.

ETF 7

解释：

C is correct.

ETFs that trade infrequently may have large premiums or discounts to NAV, because the ETF may not have traded in the hours leading up to the market close and NAV may have significantly risen or fallen during that time because of market movement. Furthermore, NAV is often a poor fair value indicator for ETFs holding foreign securities because of differences in exchange closing times between the underlying (e.g., foreign stocks, bonds, or commodities) and the exchange where the ETF trades. Therefore, ETF 7 is most likely to have the largest discount or premium because it has a low trading frequency and has the highest percentage of foreign holdings among the three ETFs.

A is incorrect because ETF 5 has the lowest percentage of foreign holdings among the three ETFs and is the one ETF with a high trading frequency. Therefore, relative to ETF 7, with its low trading frequency and high foreign holdings, ETF 5 is likely to trade at smaller premiums or discounts.

B is incorrect because ETF 6 has a lower percentage of foreign holdings than ETF 7. Even though both ETF 6 and ETF 7 have the same low trading frequency, the lower percentage of foreign holdings for ETF 6 is likely to result in it trading at smaller premiums or discounts.