All RE5 questions
Financial Products Apply knowledge of the financial products and services environment
A client wants to invest a lump sum but cannot afford to lose any capital and may need the money within six months. Which recommendation is most consistent with suitable advice?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) A low-risk, liquid option such as a money-market fund, matching the short horizon and capital-protection need.Correct
- b) Whatever product currently pays the representative the most commission.
- c) A volatile equity portfolio, because it has the highest long-term return.
- d) A 20-year endowment with heavy early-surrender penalties.
Why this is the answer
Suitable advice matches the product to the client's risk tolerance, time horizon and objectives. A six-month horizon with no capacity for loss calls for a low-risk, liquid vehicle (e.g. money market), not volatile equities, a long-locked endowment, or a commission-driven choice.
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