Give a valid reason that would cause an ETF to sell at a premium to its...

Give a valid reason that would cause an ETF to sell at a premium to its net asset value.

Expert Solution

ETFs are traded on the exchange. Their prices fluctuate in real time, but the net asset value is reported only once at the end of the day.

ETFs are said to be trading at a premium when their real time prices on the exchange are greater than the previously reported NAV. One of the reasons for ETFs to trade at a premium is a positive news about the ETF during the market hours. A positive news pushes the prices of the ETFs up which may not have been reflected in the NAV.

jeff jeffy answered 2 years ago

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