Balaji Viswanathan

Explaining Inverse and Leveraged ETFs

Barg:
1. DXO is an ETN and these have a slightly different behavior from ETFs. ETF is a fund with a Net Asset Value, so you could theoratically liquidate the fund and pay out its holders with that value. ETN is like a bond where the issuer will try to match up the returns of the underlying index, so it depends on the credit worthiness of the issuer, not just on the underlying.

2. ETF prices are controlled by the market forces and kept in line by their market markets who can issue new stocks or redeem existing ones when buyers or sellers increase, with layers of transactions beneath them. Also the arbitragers keep working on to maintain the price levels tracking the underlying by shorting or going long as necessary.

Yahoo finance has an introduction to ETF:
finance.yahoo.com/etf/...