SIE Exam Question 1045: Answer and Explanation

Question: 1045

All but which of the following are correct regarding exchange-traded notes (ETNs)?

• A. They typically do not make interest payments to investors.
• B. They are secured debt obligations of the issuer.
• C. Their value is determined by the performance of an underlying index or benchmark on the ETN's maturity date, minus any specified fees.
• D. They trade on exchanges throughout the day, similar to stocks and ETFs.

Correct Answer: B

Explanation:

Exchange-traded notes (ETNs) are unsecured debt obligations of the issuer and typically do not make interest payments to investors. Their value is determined by the performance of an underlying index or benchmark on the ETN's maturity date, minus any specified fees, and they trade on exchanges throughout the day, similar to stocks and ETFs.