Three Investment Alternatives Load or commission Expected annual total returns Risk Alternative A None 10.73% Moderate...

 

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Three Investment Alternatives Load or commission Expected annual total returns Risk Alternative A None 10.73% Moderate 0.4% Alternative B 5% front-end 10.62% Moderate 3 Management fees Questions: 1. Which investment alternative: a. Provides the highest returns to the client? b. Provides the highest profits to Stuart & Co.? 2. If your answer to (b) is not the same as your answer to (a) and Philip recommends the highest profit choice, is he acting unethically? Why or why not? 3. Which alternative should the top management of Stuart & Co. want Philip to recommend to his client? Is the company's control system designed to ensure that choice? What can the company do implement better controls? Alternative C 3% to purchase; 3% to sell 1.2% 11.01% Moderate 4. From examples stated in the case, what may head-office measure in order to access performance? 5. Name another industry/situation where this may occur. Three Investment Alternatives Load or commission Expected annual total returns Risk Alternative A None 10.73% Moderate 0.4% Alternative B 5% front-end 10.62% Moderate 3 Management fees Questions: 1. Which investment alternative: a. Provides the highest returns to the client? b. Provides the highest profits to Stuart & Co.? 2. If your answer to (b) is not the same as your answer to (a) and Philip recommends the highest profit choice, is he acting unethically? Why or why not? 3. Which alternative should the top management of Stuart & Co. want Philip to recommend to his client? Is the company's control system designed to ensure that choice? What can the company do implement better controls? Alternative C 3% to purchase; 3% to sell 1.2% 11.01% Moderate 4. From examples stated in the case, what may head-office measure in order to access performance? 5. Name another industry/situation where this may occur.

Answer rating: 100% (QA)

1 a The investment alternative that provides the highest returns to the client is Alternative B which has a 5 frontend load or commission This alternative has an expected annual total return of 1073 a... View the full answer