Page 207 - CAPE Financial Services Syllabus Macmillan_Neat

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02269020/CAPE/KMS 2016 SPEC

FINANCIAL SERVICES STUDIES

UNIT 2 - PAPER 02

KEY AND MARK SCHEME

(c) Assessment of the importance of investors in performing
due diligence
- The goal of due diligence is to disclose hidden
information about a business.
- Due diligence needs to be performed because some business
owners intentionally hide information about a business.
- Due diligence is also a tool that an investor can use to
discover other vital information about a business.
- Due diligence is an opportunity for the investor to do
their homework by assessing how well the business fits
into the current operations.
- The discovery of the likelihood of an event occurring in
the future that could have a negative effect on the
investment.
- Assessing a risk that could impact on the future
sustainability of the investment.

For any 4 reasons, 1 mark for stating the reason, and 1 mark
for the explanation.