Which one of the following statements about Exchange Traded Funds (ETFs) as marketable investment products is NOT correct from a basic personal finance point of view?

Introduction / Context:
Exchange Traded Funds, commonly called ETFs, are an important investment product that combine features of mutual funds and individual shares. Competitive exam questions often test whether a candidate can distinguish the correct basic properties of ETFs from statements that are slightly misleading. In this question you are asked to pick the statement that is not correct, so you must recall how ETFs are structured, how they trade during the day, and how their costs and liquidity compare with regular mutual fund schemes.

Given Data / Assumptions:
- The question is about general features of exchange traded funds as they are commonly offered to retail investors.
- Four qualitative statements are given that talk about marketability, intraday price changes, liquidity and fees, and trading behaviour.
- Exactly one of these statements is factually incorrect, while the remaining statements are broadly correct at an introductory level.

Concept / Approach:
An ETF is a pooled investment vehicle that holds a basket of assets, like a mutual fund, but it is listed and traded on a stock exchange like a share. Because of this structure there are some standard benchmark facts. Units of an ETF are marketable securities. They trade throughout exchange hours and therefore their market prices move up and down continuously. In addition, most popular ETFs, especially index based ones, are designed to offer relatively low management fees and reasonably good liquidity. Any option that contradicts these core features of ETFs should be treated as the incorrect statement.

Step-by-Step Solution:
Step 1: Look at option A. ETF units are listed on an exchange and can be freely bought and sold, so they are indeed marketable securities. Option A is therefore a correct description.Step 2: Look at option B. Because ETFs trade during the whole market session, their prices do not stay fixed. They change whenever investors place buy and sell orders. This is another standard feature, so option B is also correct.Step 3: Look at option D. This option emphasises that transactions in ETFs take place at market prices on the exchange rather than only at a single end of day price, which is how traditional mutual fund redemptions work. As a simple comparison between ETFs and open ended funds, this statement is acceptable and broadly correct.Step 4: Look at option C. It claims that ETFs usually have lower liquidity and higher fees than comparable mutual fund schemes. In practice, one of the selling points of ETFs is that many of them offer competitive liquidity and low expense ratios because they are often passively managed index funds. So option C clearly conflicts with the normal advantages of ETFs and is therefore the incorrect statement.

Verification / Alternative check:
A fast way to verify your reasoning is to recall why investors shift from mutual funds to ETFs. They usually mention intraday tradability, transparency and lower fund management charges as key attractions. Liquidity in actively traded ETFs is also supported by market makers and arbitrageurs. Since option C claims exactly the opposite situation, it stands out as the wrong statement. The other three options fit the standard textbook level description of ETFs, so the pattern of three correct features and one wrong feature is consistent.

Why Other Options Are Wrong:
Option A is not wrong because by definition ETF units are listed and therefore marketable. Option B is not wrong because intraday price movement is a central characteristic of exchange traded securities. Option D is not wrong because, although an official net asset value is still calculated once per day for reporting, investors actually transact in ETFs at market determined prices on the exchange rather than only at a single end of day price like in many open ended mutual funds.

Common Pitfalls:
Students sometimes assume that all funds behave like traditional mutual funds and forget the exchange traded nature of ETFs. Another common mistake is to confuse the official calculation of net asset value with the practical experience of price changes on the exchange. Some candidates also over generalise from a few small or illiquid ETFs and conclude that low liquidity and high charges are typical of the entire product category. Careful reading of the options and recalling the main advantages that are quoted in investor education material helps to avoid these errors.

Final Answer:
The incorrect statement about Exchange Traded Funds is It typically has lower daily liquidity and higher management fees than comparable mutual fund schemes..