SIE Understanding Products and Their Risks Question 91: Answer and Explanation

Question: 91

ETFs operate with a pricing exemption from which of the following acts?

• A. Securities Act of 1933
• B. Securities Exchange Act of 1934
• C. Investment Company Act of 1940
• D. Commodity Futures Modernization Act of 2000

Correct Answer: C

Explanation:

C: Choice C is correct because it establishes the rule that investment companies value their portfolios at the next calculated net asset value (NAV), which happens when the markets close. ETFs need a pricing exemption because their shares trade on an exchange, so the market value is not necessarily the same as the NAV at any given time. Choices A, B, and D are incorrect.