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CMFASPrepStudyingRES5
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Financial advisory
RES5Financial Advisory Services✓During heavy redemptions a fund caps the proportion of units that may be redeemed in a dealing period so it need not dump assets at a discount. This liquidity-management tool is known as:
Gating caps (limits) redemptions to manage the mismatch between how fast investors can redeem and how fast underlying assets can be sold — a liquidity-risk tool alongside suspension and swing pricing.
Confusing a redemption cap (gating) with hedging, gearing or index sampling.
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