Product Knowledge

Question 1

• Corporate Ownership
• May pay dividends
• 1. Large Cap: least volatility/least growth potential
     
     2. Mid Cap: more volatility/more growth potential
     3. Small Cap: most volatility/most growth potential

SUITABLE FOR:
Investors seeking long term growth and opportunity to outpace inflation

UNSUITABLE FOR:
Short term investors or those seeking safety of principal

Answer 1

Common Stock

Question 2

• Pays fixed dividend, but doesn’t share in earnings growth
• Receives dividends before common
• Has no voting or preemptive rights
• Subject to inflation (purchasing power) risk and interest rate risk

SUITABLE FOR:
investors seeking stable dividend income with returns that are comparable to long term bonds.

UNSUITABLE FOR:
investors seeking capital appreciation

Answer 2

Preferred Stock

Question 3

• More volatile than most stocks (high beta)
• Offers little or no dividend income
• Low dividend payout ratio and high P/E ratio

SUITABLE FOR:
Investors seeking long term growth and retirement savings; good hedge against inflation

UNSUITABLE FOR:
investors seeking income or short term investing due to its greater volatility

Answer 3

Growth Stock

Question 4

• Company has stable earnings and the stock is less risky than most stocks (low beta)
• High dividend payout and low P/E ratio

SUITABLE FOR:
Investors seeking stable dividend income (older or retired investors)

UNSUITABLE FOR:
investors seeking growth

Answer 4

Utility Stock

Question 5

• A receipt of ownership in a foreign corporation
• Trades in US Market and in US Dollars
• Must be SEC registered, unless exempt
• Subject to market and exchange rate risk
• May pay dividends

SUITABLE FOR: investors seeking to invest in foreign companies

UNSUITABLE FOR: Investors unwilling to take on the risk associated investing in foreign companies

Answer 5

American Depositary Receipts
(ADR)