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.</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</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</p> Signup and view all the answers

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

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

    What differentiates compound interest from simple interest?

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

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

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

    What key factors should be considered when making investment decisions?

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

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

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

    What is the main goal of business investments?

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

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

    <p>Dividend</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.</p> Signup and view all the answers

    Which investment option is characterized by lower liquidity?

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

    What is a significant risk associated with venture capital investments?

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

    What feature of government bonds typically affects their attractiveness?

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

    What is essential for navigating complexities in financial markets?

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

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

    <p>Government retail bonds</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.</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.</p> Signup and view all the answers

    Which of the following best describes compound interest?

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

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

    <p>Ordinary shares</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.</p> Signup and view all the answers

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

    <p>Endowments/Retirement annuities</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.</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.</p> Signup and view all the answers

    Which characteristic is associated with managed portfolios?

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

    What factor is essential for navigating the investment environment successfully?

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

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

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

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

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

    What distinguishes managed portfolios from mutual funds/stokvels?

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

    What common misconception might investors have regarding government bonds?

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

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