Stock market basics
Exchange-traded fund (ETF)
Definition
A fund that holds a basket of assets and trades on an exchange under one ticker, at a market price that changes through the day.
Example
Suppose an ETF holds all 100 stocks of an index and trades at $80.00 at the open. If you buy 25 shares for $2,000, your money is spread across all 100 companies through a single trade. If the index drops 1% by midday, the ETF trades around $79.20 and your position is worth about $1,980, without waiting for an end-of-day price.
Hypothetical numbers, for illustration only.
Also defined in
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