
Understanding Covered Call ETFs
Interactive Video
•
Business, Finance, Economics
•
10th Grade - University
•
Hard

Aiden Montgomery
FREE Resource
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10 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is a key feature of covered call ETFs that makes them attractive to some investors?
They are risk-free investments.
They have no management fees.
They offer unlimited upside potential.
They provide guaranteed returns by sacrificing potential stock gains.
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
How does a covered call ETF like NVDY generate income?
By buying high-dividend stocks.
By selling call options on the assets it holds.
By investing in bonds.
By short selling stocks.
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What happens to the potential gains when a covered call ETF sells call options?
The gains are maximized.
The gains are guaranteed.
The potential for further gains is sacrificed.
The gains are unaffected.
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Why might a covered call ETF outperform the asset it tracks if the stock price remains flat?
Because it invests in multiple assets.
Because it benefits from stock price increases.
Because it has lower management fees.
Because it sacrifices potential price increases for compensation.
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is a potential risk of investing in covered call ETFs?
They have no associated risks.
They are immune to market fluctuations.
They may face liquidity issues as they grow in popularity.
They guarantee a fixed dividend yield.
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
How do interest rate changes affect covered call ETFs?
They only affect bond ETFs.
They can impact the value of call options and thus the dividends.
They increase the ETF's management fees.
They have no effect.
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What should an investor consider before buying a covered call ETF for the long term?
The ETF's past performance only.
The average long-term return of the stock market versus the ETF's expected return.
The ETF's popularity among other investors.
The potential for high short-term gains.
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