ABy giving savers exposure to a broad, diversified range of assets
BBy distributing welfare and social security payments
CBy determining the size of government fiscal deficits
DBy underwriting state pension entitlements
EBy directly creating and issuing government gilts
✓ Correct answer: A. By giving savers exposure to a broad, diversified range of assetsInvestment funds pool contributions from many investors to hold a diverse mix of assets, reducing individual risk and providing a vehicle for long-term wealth accumulation.
Why the other options are incorrect:
• By distributing welfare and social security payments: Welfare and social security payments are administered by government departments, not investment funds.
• By determining the size of government fiscal deficits: Fiscal deficits are determined by HM Treasury's spending and revenue decisions, not by investment funds.
• By underwriting state pension entitlements: State pension entitlements are guaranteed and managed by government, not investment funds.
• By directly creating and issuing government gilts: Government gilts are issued by the Debt Management Office, not by investment funds.
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Theory