Suitability Flashcards
Learn suitability
Short term investors who want liquidity and safety
Think
Cash equivalents
Money markets
Agressive investors only
Think
Emerging market securities
Emerging market funds
Investors willing to assume extra risks and who want to diversify outside the U.S. Market
Think flag
Non U.S. securities
Foreign funds
Investors willing to assume more risk in exchange for a higher potential return
Think special eyes
Securities in one industry or geographic area
Specialized or sector funds
Investors who want to pursue passive investment strategy and wants low fees
Think index finger
Securities selected to mirror a particular index
Index funds
Investors who want diversification among asset classes in a single fund
Think
Ass basket
Stocks, bonds, cash equivalents
Asset allocations
Investors who want to have something in all 3 classes of assets
Think tripod
Mix of stocks, bonds, cash equivalents
Money markets always have this feature
Balanced fund
Investors who want high income
Willing to accept a degree of high capital risk
Junk bonds
High yield funds
Investors who need income
Think
Corporate Jason
Investment grade Corporate Bonds
Corporate Bond Funds
People who want tax exempt income
Municiple securities
Municipal bond funds
People who want income with the highest safety
Think
Treasuries
U.S. government Bonds
Those primarily interested in current income
Debt Securities (fixed income)
Bond funds
People who want both capital appreciation and income
Stocks and dividend stocks
Growth and income
Investors who want income along with some small potential for capital appreciation
Common and preferred stock
Equity income
Long term investors seeking capital appreciation
Small and midcap stocks
Aggressive growth
Long term investors seeking capital appreciation
Blue chip, large cap stocks
Conservative growth
Long term investors seeking capital appreciation
Common stock
Growth
Appreciation share price of capital gains
Value and growth stocks
Think
Blend core fund
Appreciation share price of capital gains
Value and growth stocks
Think
Blend core fund
Separate accounts and mutual funds have what in common
Think div…. and v…s
Diversified portfolios of common stock
Give voting rights
ETFs
Think
Priced by Supply and demand
Tracks an index
Why is a 20 year bond with a 4% coupon
More sensitive to interest rates than
A 20 year 6% coupon
Length of time (20 years)
Slower pay off (4%)
Time and rate to pay : the longer the rime and the smaller the coupon the greater the sensitivity to interest rates
Mid cap common stock mutual fund
Think
Mid caps stocks :
good hedge against inflation
Good for long term growth
