Benefits of Capital Markets: Benefits To Individual Investors - SS2 Accounting Past Questions and Answers - page 1
Which of the following is a potential benefit of investing in the capital market?
Guaranteed returns
Low risk
Higher returns
Fixed returns
What is the potential benefit of diversification in the capital market?
Higher risk
Lower liquidity
Increased transparency
Reduced risk
Which of the following is a potential benefit of investing in the capital market?
Limited access to professional management
Limited liquidity
Potential for high returns
Low transparency
What is a potential benefit of the regulation of the capital market?
Higher risk
Increased liquidity
Reduced transparency
Increased transparency
Which of the following is a potential downside of investing in the capital market?
Limited access to professional management
Low liquidity
Low transparency
Market volatility
What is diversification and how can it benefit investors in the capital market?
Diversification is the practice of investing in a variety of stocks, bonds, and other securities in order to reduce the risk of loss in the event that one investment performs poorly. By diversifying their portfolio, investors can spread their risk across a range of assets, potentially reducing the impact of market volatility on their overall investment performance.
What factors should individual investors consider when deciding whether to invest in the capital market?
Individual investors should consider a range of factors when deciding whether to invest in the capital market, including their investment goals, risk tolerance, and time horizon. They should also consider the costs associated with investing in the capital market, such as trading fees and management fees, as well as the potential risks and rewards of investing in different types of securities. Finally, they should be prepared to monitor their investments regularly and make adjustments as needed based on market conditions and their own changing financial situation.