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Mario, a financial consultant, made a presentation on ordinary and preference shares - NSC Business Studies - Question 8 - 2019 - Paper 1
Question 8
Mario, a financial consultant, made a presentation on ordinary and preference shares. The presentation also addressed factors that need to be considered when making ... show full transcript
Worked Solution & Example Answer:Mario, a financial consultant, made a presentation on ordinary and preference shares - NSC Business Studies - Question 8 - 2019 - Paper 1
Step 1
Differentiate between ordinary and preference shares.
Answer
Ordinary shares represent a portion of the company and provide shareholders with voting rights at the Annual General Meeting. They receive dividends, but only after profits are made, with the amount dependent on the company's decisions. In contrast, preference shares guarantee dividends before ordinary shares and often come with fixed percentages. They usually do not carry voting rights but have a preferential claim on assets in the event of liquidation.
Step 2
Discuss the following factors that must be considered when making an investment decision: Risk
Answer
Risk refers to the uncertainty regarding the potential loss or gain related to the investment. Higher potential returns typically come with higher risks. Investors must evaluate their tolerance for risk when considering where to invest and be informed of potential losses that could occur during market fluctuations.
Step 3
Discuss the following factors that must be considered when making an investment decision: Taxation
Answer
Taxation involves understanding the tax implications of investment returns. Investors should be aware of compulsory taxes that could reduce overall profit. It’s vital to understand how different investments are taxed to effectively calculate net returns and select tax-efficient investment vehicles.
Step 4
Discuss the following factors that must be considered when making an investment decision: Investment period
Answer
The investment period is crucial as it determines the duration for which the investor intends to hold the investment. Longer-term investments might yield different results compared to short-term ones due to market fluctuations. Investors need to align the investment period with their financial goals, ensuring that their investments can meet their liquidity needs.
Step 5
Explain to Mario the factors that he should consider during a presentation.
Answer
Mario should focus on establishing credibility from the beginning. He must avoid irrelevant information and possibly use engaging visuals. Clearly outlining key points will capture interest, and he should invite audience interaction to enhance engagement. Ensuring clarity and keeping a steady pace will aid in conveying his message effectively.
Step 6
Recommend ways in which Mario can improve on his next presentation.
Answer
Mario can revise his objectives to ensure they are clear and achievable. Incorporating relevant feedback and updating the presentation to reflect this will be beneficial. He should also ensure that the presentation is logically structured, using visual aids effectively to enhance understanding, and practicing to maintain a confident delivery.