SIE Understanding Products and Their Risks Question 94: Answer and Explanation

Question: 94

The S&P 500 is an example of which of the following?

• A. Market ETF
• B. Inverse ETF
• C. Leveraged ETF
• D. Monolithic ETF

Correct Answer: A

Explanation:

A: Choice A is correct because the S&P 500 is an ETF that tracks an index that is considered to represent the market as a whole. Choice B is incorrect because the S&P 500 is not an example of an ETF seeking the opposite return of a target index. Choice C is incorrect because the S&P 500 is not an example of an ETF using borrowing to obtain a return in excess of the target index. Choice D is incorrect because it is not a typical term for any popular type of ETF.