All RE5 questions
Financial Products Apply knowledge of the financial products and services environment
A representative must understand the risk profile of any product they recommend. Which factor most directly determines that risk profile?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) The physical address of the FSP’s office.
- b) The identity of the FSP’s key individual.
- c) The potential for loss of capital and the volatility of returns.Correct
- d) The visual design of the product brochure.
Why this is the answer
A product's risk profile turns on how much capital could be lost and how much the value fluctuates (volatility) — which the representative must understand to match it to the client's risk tolerance. Brochure design, the KI's name and the office address are irrelevant to risk.
Want to test yourself on 700+ more questions like this?
Start your free RE5 simulator today — timed mock exams, full answer explanations and cloud-synced progress tracking.
More Financial Products questions
- A house worth R1 000 000 is insured for R600 000 under a short-term policy subject to a…
- A retiree puts all her savings into a five-year fixed deposit at one small bank. Two ye…
- A car with a market value of R180 000 is insured for R250 000 under a short-term policy…
- Four representatives each deal in one product only: Asha: funeral policies. Ben: retire…