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2.1 State any FOUR examples of insurable risks - NSC Business Studies - Question 2 - 2022 - Paper 2
Question 2
2.1 State any FOUR examples of insurable risks. 2.2 Outline the advantages of Government/RSA Retail Savings Bonds as a form of investment. 2.3 Read the scenario ... show full transcript
Worked Solution & Example Answer:2.1 State any FOUR examples of insurable risks - NSC Business Studies - Question 2 - 2022 - Paper 2
Step 1
Step 2
Outline the advantages of Government/RSA Retail Savings Bonds as a form of investment.
Answer
- Guaranteed returns: Government bonds provide fixed and predictable returns on investment.
- Low risk: They are secured by the government, making them safer than other forms of investment.
- Liquidity: Retail Savings Bonds can be easily converted to cash.
- Tax benefits: Interest earned may have favorable tax treatment.
Step 3
Step 4
Calculate the amount that AT will receive as compensation from the insurer. Show ALL calculations.
Answer
To calculate the compensation, we use the Average Clause formula:
[ \text{Compensation} = \left( \frac{\text{Insured Amount}}{\text{Market Value}} \right) \times \text{Loss} ]\n[ \text{Compensation} = \left( \frac{R400,000}{R600,000} \right) \times R90,000 ]\n[ \text{Compensation} = \left( \frac{2}{3} \right) \times R90,000 ] [ \text{Compensation} = R60,000 ]
Step 5
Elaborate on the meaning of debentures as a type of investment opportunity.
Answer
Debentures are fixed-income instruments that represent a loan made by an investor to a borrower (typically a corporation). They are a way for companies to raise funds without diluting their equity. Here are some key aspects:
- Return on Investment: Investors receive a fixed rate of interest, often more favorable than traditional savings options.
- Issuance: Companies issue debentures to finance expansion, acquire assets, or refinance existing debts.
- Risk: Unlike stocks, debenture holders have a priority claim over assets in case of liquidation.
Step 6
Discuss the impact of the democratic leadership style on businesses.
Answer
Democratic leadership involves encouraging team participation in decision-making processes. Its impact includes:
- Enhanced Communication: Fosters open dialogue, helping in understanding diverse viewpoints.
- Increased Morale: Employees feel valued and empowered, leading to higher job satisfaction.
- Shared Responsibility: Distributes workload and encourages team collaboration, promoting innovation.
Step 7
Step 8
Explain the areas of improvement that Mary should consider for her next presentation.
Answer
- Clarifying objectives: Mary should ensure that her presentation has clear goals that align with her audience's expectations.
- Enhancing visual aids: She can improve slide designs and use visuals effectively to aid understanding.
Step 9
Advise businesses on how the following criteria could contribute to the success and/or failure of a personal liability company: Management.
Answer
Effective management involves:
- Appointment of Competent Directors: Ensures knowledgeable leadership that can guide the company towards its objectives, promoting growth and stability.
- Decision-Making Processes: Transparent and efficient decision-making can enhance responsiveness and adaptability in the market.
Step 10
Advise businesses on how the following criteria could contribute to the success and/or failure of a personal liability company: Legislation.
Answer
Understanding relevant legislation is crucial:
- Compliance: Adhering to laws avoids penalties and legal issues, promoting business continuity.
- Regulatory Changes: Staying informed about legal changes helps businesses adapt and seize new opportunities.