Understanding Exchange-Traded Funds (ETFs)
An ETF is called an exchange-traded fund because it’s traded on an exchange just like stocks are. The price of an ETF’s shares will change throughout the trading day as the shares are bought and sold on the market. This is unlike mutual funds, which are not traded on an exchange, and which trade only once per day after the markets close. Additionally, ETFs tend to be more cost-effective and more liquid compared to mutual funds.
An ETF is a type of fund that holds multiple underlying assets, rather than only one like a stock does. Because there are multiple assets within an ETF, they can be a popular choice for diversification. ETFs can thus contain many types of investments, including stocks, commodities, bonds, or a mixture of investment types. An ETF can own hundreds or thousands of stocks across various industries, or it could be isolated to one particular industry or sector. Some funds focus on only U.S. offerings, while others have a global outlook. For example, banking-focused ETFs would contain stocks of various banks across the industry.
NFTs are non-fungible tokens. In economic terms, a non-fungible asset is something of value that cannot be interchanged. NFTs are becoming valuable and the demand is steadily increasing. Let’s find out why they are so valuable. NFTs are valuable because they verify the authenticity of a non-fungible asset. This makes these assets unique and one of a kind. Picasso’s paintings are non-fungible. While anyone can make copies of his paintings, the original painting remains irreplaceable and unique. NFTs make digital content irreplaceable, hence valuable. To understand the value of NFTs further it is necessary to understand ‘fungibility’ better. ‘Fungible’ is the term used when you are able to exchange an asset that you own with another asset of equal value. Currency is an example of a fungible asset. For example, imagine you have $20 and you get two 10 dollar bills in exchange for the $20. You still have the same value but you have exchanged your asset and received a new asset.