CMFAS M8 What a CIS Is & the Regulatory Framework question: POOLING within a CIS specifically benefit a small

CMFAS M8What a CIS Is & the Regulatory Framework

How does POOLING within a CIS specifically benefit a small investor?

A It guarantees the investor a positive return every year, because losses are shared out
B It removes all management fees, because costs are paid by the manager rather than the pool
C It gives access to markets and lot sizes unreachable alone, and spreads fixed costs across participants
D It eliminates market-wide systematic risk entirely, because the pool holds many assets

Show the answer and explanation

Answer: C. It gives access to markets and lot sizes unreachable alone, and spreads fixed costs across participants

Pooling combines many contributions into one large pool, giving small investors access to markets and lot sizes they could not reach alone and spreading fixed costs such as dealing, custody and administration.

Common mistake

Overstating pooling as a guarantee or a fee-eliminator rather than an access-and-cost-sharing benefit.

Practise more M8 What a CIS Is & the Regulatory Framework questions

Exam-style questions with worked answers, then full timed mocks. Free to start.

Start practising →

Study note: What a CIS Is & the Regulatory Framework CMFAS M8practice questions & mock exams

CMFAS M8 What a CIS Is & the Regulatory Framework question: POOLING within a CIS specifically benefit a small

Answer: C. It gives access to markets and lot sizes unreachable alone, and spreads fixed costs across participants

Common mistake

Related CMFAS M8 questions

CMFAS M8 What a CIS Is & the Regulatory Framework question: POOLING within a CIS specifically benefit a small

Answer: C. It gives access to markets and lot sizes unreachable alone, and spreads fixed costs across participants

Common mistake

Related CMFAS M8 questions