Jeffrey is an experienced financial adviser who has just met with Lily, a long-term client who...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Jeffrey is an experienced financial adviser who has just met with Lily, a long-term client who is seeking advice about an investment prospect she has read about. Although Lily is quite wealthy and can be categorised as a wholesale client, she is not very experienced as an investor. The investment she is interested in is a high dividend yield listed fund, with which Jeffrey is very familiar. The fund was heavily invested in blue chip shares, though unbeknownst to Jeffrey, it has recently taken a significant position in a variety of higher risk shares to boost its dividend yields. This change in approach has been reported on widely in the financial press. From his previous dealings with Lily, Jeffrey is aware that she is very risk averse and is always looking for security in her investments. Jeffrey's advice to Lily is based on his outdated knowledge of the fund, and he assures her that it is a uniformly blue chip investment, with almost no risk of capital loss. Further, he refers to recent government announcements suggesting that the economy looks set for strong performance in the short term, which should give the market confidence to surge ahead. On the basis of his advice, Lily invests heavily in the fund. Due to some poor economic news that conflicts with the government announcements, the market drops not long after Lily's investment, and the fund's asset value falls due to a significant exposure to high risk shares. Lily is forced to redeem her investment at a significant loss. What principles does Lily need to establish negligence and what evidence is there in the case study to support her claim against Jeffrey in a tort for negligence? Note to students: You do not need to provide a definitive answer as to whether Lily will win any action against Jeffrey. Jeffrey is an experienced financial adviser who has just met with Lily, a long-term client who is seeking advice about an investment prospect she has read about. Although Lily is quite wealthy and can be categorised as a wholesale client, she is not very experienced as an investor. The investment she is interested in is a high dividend yield listed fund, with which Jeffrey is very familiar. The fund was heavily invested in blue chip shares, though unbeknownst to Jeffrey, it has recently taken a significant position in a variety of higher risk shares to boost its dividend yields. This change in approach has been reported on widely in the financial press. From his previous dealings with Lily, Jeffrey is aware that she is very risk averse and is always looking for security in her investments. Jeffrey's advice to Lily is based on his outdated knowledge of the fund, and he assures her that it is a uniformly blue chip investment, with almost no risk of capital loss. Further, he refers to recent government announcements suggesting that the economy looks set for strong performance in the short term, which should give the market confidence to surge ahead. On the basis of his advice, Lily invests heavily in the fund. Due to some poor economic news that conflicts with the government announcements, the market drops not long after Lily's investment, and the fund's asset value falls due to a significant exposure to high risk shares. Lily is forced to redeem her investment at a significant loss. What principles does Lily need to establish negligence and what evidence is there in the case study to support her claim against Jeffrey in a tort for negligence? Note to students: You do not need to provide a definitive answer as to whether Lily will win any action against Jeffrey.
Expert Answer:
Answer rating: 100% (QA)
Principles of Negligence and Evidence Supporting Lilys Claim Against Jeffrey Duty of Care Lily needs to establish that Jeffrey owed her a duty of care ... View the full answer
Related Book For
Auditing Cases An Interactive Learning Approach
ISBN: 978-0132423502
4th Edition
Authors: Steven M Glover, Douglas F Prawitt
Posted Date:
Students also viewed these finance questions
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Sketch the graph of the function. y = e -x/2
-
After all revenue and expense accounts have been closed at the end of the fiscal year, Income Summary has a debit of $2,450,000 and a credit of $3,000,000. At the same date, Retained Earnings has a...
-
a. How does an increase in the use of corn to produce ethanol affect the opportunity cost of corn? b. Why would you expect an increase in the quantity of corn produced to raise the opportunity cost...
-
Thomas Rusnack and his then-wife, Analisa Rusnack, opened a home equity line of credit (HELOC) with Cardinal Bank in August 2003. Between 2003 and 2006, the Rusnacks periodically drew on the HELOC...
-
A partial amortization schedule for a five-year note payable that Puro Co. issued on January 1, 2010, is shown here: Required a. What rate of interest is Puro Co. paying on the note? b. Using a...
-
MATH 114 MATH 114 ENERGY YEARLY PROJECTIONS USING ELECTRICITY, COAL, AND OIL PROJECT ASSIGNMENT INSTRUCTIONS OVERVIEW Ever wonder how your electricity bill is computed? The following tables gives the...
-
The September bank statement and cash T-account for Terrick Company follow: There were no deposits in transit or outstanding checks at August 31. Required: 1. Identify and list the deposits in...
-
Last month when Holiday Creations, Inc., sold 44,000 units, total sales were $282,000, total variable expenses were $203,040, and fixed expenses were $37,300. Required: 1. What is the companys...
-
What key strategies can enable diversity, equity, inclusion, and belonging to take hold in the workplace? Explain
-
What are the critical factors for ensuring successful implementation of business process reengineering in complex organizations?
-
Calculate the maximum traffic volume for the design lane (Directional Design hourly volume per lane: DDHV per lane) of Highway route no. 410, Ban Hua Taphan - Than-To section, which is a two-lane...
-
What is a good strategy for achieving and maintaining a healthy body weight?
-
According to "Are You Solving the Right Problem?", what is a common mistake in problem-solving?
-
Howard Manufacturing's overhead at year-end was under applied by $5,800, a small amount given the firm's size. The year-end journal entry to record this amount would include what?
-
Hotel Majestic is interested in estimating fixed and variable costs so that the company can make more accurate projections of costs and profit. The hotel is in a resort area that is particularly busy...
-
Wallys Billboard & Sign Supply, Inc. was founded four years ago by Walter Johnson. The company specializes in providing locations for sign and billboard advertising and has recently begun to enter...
-
Analytical procedures can be powerful tools in conducting an audit. They help the auditor understand a clients business and are useful in identifying potential risks and problem areas requiring...
-
On November 15, 2004, the Securities and Exchange Commission (SEC) filed an enforcement action in the Northern Illinois U.S. District Court against Hollinger Inc., a Toronto-based company, and its...
-
The following are some costs incurred by a shoe manufacturer. Decide whether each one is a fixed cost or a variable cost or has some element of both. (a) The cost of leather; (b) The fee paid to an...
-
Why does the marginal cost curve pass through the bottom of the average cost curve and the average variable cost curve?
-
Outline the main factors that might influence the size of the profit mark-up set by a business.
Study smarter with the SolutionInn App