What keeps an ETF trading close to the value of the holdings inside it?

Authorized participants create and redeem large blocks of shares whenever a gap opens up

The fund manager sets the price each morning before the open

The exchange caps how far the price can stray from net asset value

The fund holds a cash buffer that absorbs the difference

You send a mutual fund buy order at 11 a.m. and an ETF buy order at 11 a.m. on the same day. How do they fill?

The ETF fills at 11 a.m. at the market price, and the mutual fund fills at the net asset value struck after the close

Both fill at 11 a.m. at the price showing on screen

Both fill at the next day's opening price

The mutual fund fills instantly and the ETF fills at the close

Why are stock ETFs usually more tax efficient than comparable mutual funds in a taxable account?

In kind redemptions let the fund push out low cost basis shares without realizing a capital gain for the investors who stay

ETFs do not pay out dividends, so there is nothing to tax

ETF gains are taxed at a lower statutory rate

ETFs are exempt from capital gains distributions by law

An index rises 10 percent on Monday and falls 9.09 percent on Tuesday, ending exactly where it started. Where does a 2x daily leveraged fund on that index stand?

Down about 1.8 percent, because the daily reset compounds against you

Exactly flat, because the index is flat

Two funds track the same index, one at 0.03 percent a year and one at 0.60 percent. What does that difference guarantee before any manager skill is involved?

Both earn the same gross return from the index, so the cheaper fund keeps more of it for you

The expensive fund must hold more securities to justify its fee

The cheap fund will have higher turnover

The expensive fund will be more volatile

A bond ETF never matures. What does that change for you compared with holding an individual bond?

There is no date on which you are promised your principal back, because the fund keeps rolling into new bonds

The fund converts to cash automatically after ten years

The fund pays no interest until it is sold

Its price is fixed at $100 per share

A thinly traded ETF is quoted 2 percent above its net asset value. What are you actually doing if you buy at that price?

Paying more than the holdings are worth, a premium that can vanish when the gap closes

Getting a discount on the underlying bonds

Buying the fund at fair value, because market price is the true value

Locking in an extra 2 percent of yield

ETFs & Funds quiz beginner

ETFs and Index Funds Quiz: 10 Questions

Check what you know about the funds most people hold for decades without reading the fine print.

10 questions · about 6 minutes · instant explanations · nothing you answer leaves your browser

AI-assisted, reviewed and edited by Beth Ruelos. How we use AI

Sep 23, 2026 6 min read

About this quiz

Ten questions on how ETFs are built and priced, what expense ratios really cost in dollars, and why leveraged funds drift away from the index. Each question comes with a short explanation of the right answer and a link to the guide that teaches it, so a wrong answer is a reading list rather than a dead end.

The quiz draws on the ETFs & Funds section. If you are new to the topic, start with the guides below, then come back and test yourself. Scores are calculated in your browser and are not stored or sent anywhere.

Frequently asked questions

Is this quiz free?

Yes, and there is nothing to join. The quiz runs entirely in your browser, so no email address is asked for and no record of your score leaves your device.

What score counts as passing?

Seven out of ten means you understand what you own. If the fee and leverage questions caught you out, those are the two places where a small misunderstanding costs the most money over a long holding period.

Where can I learn the topics I missed?

Each explanation links to the guide covering that point, from how creation and redemption keeps an ETF near its net asset value to what a bond fund with no maturity date actually promises you.

About this quiz

Guides this quiz is based on

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