Which of the following describes Exchange Traded Funds (ETFs)?

Exchange Traded Funds (ETFs) are investment funds that are traded on national stock exchanges, similar to individual stocks. This means that they can be bought and sold throughout the trading day at market prices, which fluctuate based on supply and demand. ETFs typically pool investor money to invest in a diversified portfolio of assets, which can include stocks, bonds, commodities, or other securities.

This flexibility in trading and the ability to invest in a diverse range of assets make ETFs an attractive option for many investors. They offer benefits such as liquidity, cost-efficiency, and transparency. Additionally, unlike mutual funds, which only trade at the end of the day, ETFs' market prices can change during the day, allowing investors to react to market conditions in real-time.

The other options do not accurately define ETFs. Some restrict them to stocks, while others imply a lack of trading on an exchange or reference fixed-income investments, which do not encompass the full nature of ETFs.