CCM Unit Trust Practice Questions - SEC Sri Lanka Certificate In Unit Trust (CCM) Exam

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Why does pooling money in a unit trust give a small retail investor access to a more diversified portfolio than they could typically build on their own?

Because the fund guarantees that every underlying security will rise in value Because the combined capital of many unit holders is large enough to be spread across many different securities and asset classes Because the SEC reimburses any losses suffered by individual retail unit holders Because each unit holder is allowed to personally select the individual stocks the fund must buy

Correct Answer:

Because the combined capital of many unit holders is large enough to be spread across many different securities and asset classes

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