RECA Commercial Practice Exam 2025 – The Complete Study Guide to Master Your Certification!

The two primary investment objectives of an investor are centered around risk and return. An investor typically seeks to strike a balance between the level of risk they are willing to take and the returns they desire from their investments. Risk refers to the chance that an investment's actual returns will differ from the expected returns, including the potential loss of capital. Return, on the other hand, represents the gain or loss made on an investment over a certain period.

Investors must consider their own risk tolerance, which varies based on individual circumstances, such as financial goals, investment horizon, and personal preferences. The interplay between risk and return is fundamental to investing; higher potential returns usually come with higher risk. Therefore, formulating a strategy that encompasses both these aspects is vital for effective investment planning.

While other options mention valid concepts such as growth, stability, income, and capital gains, they don't encapsulate the core principles driving investment decisions as well as the relationship between risk and return does. These two factors fundamentally guide investors in making informed decisions about where to allocate their resources to achieve their financial goals.