Lesson 6: Creation, Redemption & Why ETFs Stay on Price. The invisible machine that keeps ETF prices within pennies of their holdings.
An ETF holds stocks worth $100 a share. Can the ETF itself trade at $120?
Gut check before we open the hood.
Assessment
An ETF holds a basket of stocks worth exactly $100 per share. Can the ETF itself trade at $120 while those stocks are still worth $100?
$100 of stock, $120 sticker 🤔 Can that hold?