Life Sciences: Genetic lineages/pedigrees

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Questions and Answers

What is typically the relationship between risk and potential return in investments?

  • Higher risks are usually associated with higher potential returns. (correct)
  • Higher risks usually result in lower potential returns.
  • Risk and return do not have a correlational relationship.
  • Lower risks often lead to higher potential returns.

Which investment option is known for its low risk and less liquidity?

  • 32-Day Notice Accounts (correct)
  • Mutual Funds
  • Venture Capital
  • Managed Portfolios

What type of investment involves a high risk but potential for substantial returns by investing in startups?

  • Debentures
  • Government Bonds
  • Venture Capital (correct)
  • Endowments

What characteristic is often associated with government bonds?

<p>Security but lower returns. (C)</p> Signup and view all the answers

What should an investor's choice of investment primarily align with?

<p>Investor's financial goals, risk tolerance, and investment horizon (D)</p> Signup and view all the answers

Which of the following investment vehicles is designed for long-term wealth building with fixed returns?

<p>Retirement Annuities (B)</p> Signup and view all the answers

What is a common risk associated with mutual funds and stokvels?

<p>Fraud or mismanagement (B)</p> Signup and view all the answers

What should investors do for a deeper understanding of investment options?

<p>Conduct extensive research and consult financial advisors (D)</p> Signup and view all the answers

What is the primary function of the Johannesburg Securities Exchange (JSE)?

<p>To facilitate the trading of financial instruments (A)</p> Signup and view all the answers

Which type of investment offers the safest option for preserving capital while earning interest?

<p>Government retail bonds (C)</p> Signup and view all the answers

What differentiates compound interest from simple interest?

<p>Compound interest leads to exponentially growing returns (C)</p> Signup and view all the answers

Which investment type allows individuals to pool their money in a professional fund?

<p>Mutual funds (C)</p> Signup and view all the answers

What key factors should be considered when making investment decisions?

<p>Return on investment and associated risks (C)</p> Signup and view all the answers

Which type of shares typically does not confer a voting right to shareholders?

<p>Preference shares (C)</p> Signup and view all the answers

What is the main goal of business investments?

<p>To acquire shares and influence business decisions (D)</p> Signup and view all the answers

What term refers specifically to the income generated from owning shares?

<p>Dividend (C)</p> Signup and view all the answers

What is a key advantage of managed portfolios in investment?

<p>They are managed by professionals, providing diversification. (A)</p> Signup and view all the answers

Which investment option is characterized by lower liquidity?

<p>32-Day Notice Accounts (C)</p> Signup and view all the answers

What is a significant risk associated with venture capital investments?

<p>High potential returns with increased risk. (C)</p> Signup and view all the answers

How do debentures compare to other investment types?

<p>They are fixed-interest securities generally considered low-risk. (C)</p> Signup and view all the answers

What should an investor primarily focus on when choosing an investment opportunity?

<p>Aligning the investment with financial goals and risk tolerance. (B)</p> Signup and view all the answers

What feature of government bonds typically affects their attractiveness?

<p>They provide security with lower potential returns. (B)</p> Signup and view all the answers

Which investment strategy is recommended for individuals seeking to build wealth over time?

<p>Focus on long-term options like endowments and retirement annuities. (B)</p> Signup and view all the answers

What is essential for navigating complexities in financial markets?

<p>Consideration of ROI, risk, and economic indicators. (C)</p> Signup and view all the answers

What is the primary benefit of investing in unit trusts?

<p>They enable pooling of resources for professional management. (B)</p> Signup and view all the answers

Which factor is least important when evaluating the return on investment (ROI)?

<p>Material value of the investment (B)</p> Signup and view all the answers

What distinguishes venture capital from other types of investments?

<p>It involves direct investments in early-stage startups. (B)</p> Signup and view all the answers

Which of the following provides a low-risk investment option with fixed returns?

<p>Government retail bonds (D)</p> Signup and view all the answers

What is the primary role of the Johannesburg Securities Exchange (JSE)?

<p>To allow trading of various financial instruments. (D)</p> Signup and view all the answers

Why are dividends considered an essential aspect of investment income?

<p>They provide periodic income from owning shares. (D)</p> Signup and view all the answers

Which of the following best describes compound interest?

<p>Interest on interest, leading to exponential growth. (D)</p> Signup and view all the answers

Which of these types of shares typically allows for voting rights?

<p>Ordinary shares (C)</p> Signup and view all the answers

What is a characteristic of venture capital investments?

<p>They are associated with investing in startups or expanding businesses. (B)</p> Signup and view all the answers

What type of investment is generally considered to have lower liquidity?

<p>Endowments/Retirement annuities (A)</p> Signup and view all the answers

Which of the following describes the impact of government bonds?

<p>They are security instruments with low returns. (D)</p> Signup and view all the answers

What aspect is crucial for understanding investments in mutual funds and stokvels?

<p>They can be influenced by mismanagement or fraud. (A)</p> Signup and view all the answers

Which characteristic is associated with managed portfolios?

<p>They provide diversified investments managed by professionals. (C)</p> Signup and view all the answers

How does risk tolerance influence investment decisions?

<p>It helps align investments with personal comfort levels regarding potential losses. (C)</p> Signup and view all the answers

What factor is essential for navigating the investment environment successfully?

<p>Understanding ROI, risk, and economic conditions (C)</p> Signup and view all the answers

What is a common misconception about fixed-interest securities like debentures?

<p>They are considered low-risk investments offering predictable returns. (A)</p> Signup and view all the answers

What differentiates unit trusts from direct business investments?

<p>Unit trusts allow individual investors to own shares in multiple companies. (A)</p> Signup and view all the answers

Which type of investment is characterized by the opportunity to earn fixed returns with lower risk?

<p>Government retail bonds (B)</p> Signup and view all the answers

What is one major factor that influences an investor's return on investment (ROI)?

<p>The inflation rate during the investment term (C)</p> Signup and view all the answers

Which of the following types of shares typically provides shareholders with no voting rights?

<p>Preference shares (C)</p> Signup and view all the answers

What is a significant advantage of investing in managed portfolios compared to individual stocks?

<p>They facilitate diversification across various asset classes. (A)</p> Signup and view all the answers

What are dividends primarily associated with in terms of investment income?

<p>Income generated from owning shares in a company (C)</p> Signup and view all the answers

Which component is crucial for evaluating the risk associated with an investment opportunity?

<p>The historical performance of similar investments (B)</p> Signup and view all the answers

What is a common misconception about compound interest compared to simple interest?

<p>Compound interest is calculated only on the principal amount. (C)</p> Signup and view all the answers

What distinguishes unit trusts from direct business investments in terms of management?

<p>Unit trusts are professionally managed funds, whereas direct investments require investors to make their own decisions. (C)</p> Signup and view all the answers

Which factor is most crucial when assessing the suitability of a government retail bond as an investment option?

<p>The fixed interest rate offered by the bond relative to inflation. (D)</p> Signup and view all the answers

How is compound interest significantly more beneficial than simple interest for long-term investments?

<p>It can generate returns on both the principal and previously earned interest. (B)</p> Signup and view all the answers

Which aspect most significantly differentiates venture capital from mutual funds?

<p>Venture capital involves direct investment in startups, while mutual funds pool investor money for broader investment. (A)</p> Signup and view all the answers

What primary consideration should guide an investor when evaluating the trade-off between risk and return?

<p>The investor's personal goals, risk tolerance, and investment horizon. (B)</p> Signup and view all the answers

Which type of shares typically provides shareholders with the least voting power?

<p>Preference shares. (C)</p> Signup and view all the answers

What is the primary advantage of compound interest over simple interest in a business investment strategy?

<p>Compound interest leads to larger cumulative investment returns over time. (D)</p> Signup and view all the answers

In investment terms, what is the primary focus of assessing liquidity?

<p>The ease and speed at which an investment can be converted to cash. (B)</p> Signup and view all the answers

Why is understanding risk tolerance essential for investment decisions?

<p>It aligns investment choices with personal financial goals. (B)</p> Signup and view all the answers

Which of the following investment options is characterized by higher potential returns but carries significant risk?

<p>Venture Capital (D)</p> Signup and view all the answers

What distinguishes managed portfolios from mutual funds/stokvels?

<p>Managed portfolios are professionally managed and diversified. (D)</p> Signup and view all the answers

What is a characteristic advantage of investing in debentures compared to stocks?

<p>Debentures provide fixed returns with lower risk. (B)</p> Signup and view all the answers

Considering investment types, what is the main disadvantage of 32-Day Notice Accounts?

<p>They have limited access to funds due to notice requirements. (B)</p> Signup and view all the answers

What common misconception might investors have regarding government bonds?

<p>Government bonds are always risk-free. (C)</p> Signup and view all the answers

Which aspect most influences the choice between an aggressive or conservative investment strategy?

<p>Personal risk tolerance and financial goals. (C)</p> Signup and view all the answers

What is a significant risk factor associated with the investment in mutual funds/stokvels?

<p>High expense ratios affecting overall returns. (C)</p> Signup and view all the answers

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