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What does a Commodity Pool do?

Traditionally invests in real estate

Combines funds to trade in futures or options contracts

A Commodity Pool is a collective investment vehicle that pools capital from multiple investors to invest in a variety of underlying commodities through trading in futures or options contracts. This structure allows investors access to the commodities markets, which might be difficult to enter individually due to high capital requirements and expertise needed. By pooling funds, a Commodity Pool can diversify its investments across various commodities, potentially reducing risk and enhancing returns.

This mechanism is particularly suitable for achieving exposure to commodity price movements without requiring investors to manage the trades themselves. In contrast, options such as investing in real estate, offering bonds, or focusing exclusively on foreign exchange trading do not accurately represent the primary function of a Commodity Pool, which is centered around commodities and futures trading. Therefore, the correct answer is associated with the pooling of funds for derivatives related to commodities, distinguishing it from other types of investments.

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Offers bonds to its members

Focuses exclusively on foreign exchange trading

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