Steven has some extra cash to invest and wonders if a PPN issued by a...

The most significant concern is liquidity risk because Steven may need his money unexpectedly to purchase a cabin. Principal-protected notes generally protect the original principal only when the investment is held according to its specified terms, commonly through maturity. A PPN may have limited redemption provisions or a restricted secondary market. If early redemption is permitted, the investor may receive less than the amount originally invested. This conflicts directly with Steven ' s requirement for short-notice access to capital. Credit risk exists because the guarantee ultimately depends on the issuer, but the scenario specifies a large Canadian bank and emphasizes Steven ' s immediate liquidity requirement. Currency risk is not indicated, and participation risk concerns how much market upside the investor receives. Therefore, liquidity is the key suitability concern.

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