How shall I evaluate the risks of a guarantee?
You need to assess if the value of the guarantee is appropriate for you. To help you do this you should at least understand the answers to these questions:
- Can you afford to lock up your money until the end of the guarantee period?
- How reliable are the guarantors providing the guarantee to the PPN managers and the investors?
- Is the security backing the guarantee adequate?
- Is the PPN insured by the Canadian Deposit Insurance Corporation or the Régie de l’assurance- dépôts du Québec?
Note: With some PPNs, you might receive little or no profit on your investment.
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