The table below describes two alternative investments: Fund 1 and Fund 2. The table also provides...

    

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The table below describes two alternative investments: Fund 1 and Fund 2. The table also provides the annual fee a client pays for investing in that fund, the return that fund has generated since inception, and the expected future return. Index Funds S&P Index Fund 1 S&P Index Fund 2 Annual Fee Return Since Inception 10.0% 8.0% 0.75% 0.25% Expected Future Return 9.0% 9.0% QUESTION 1 Assume an investment advisor's compensation is calculated as a percentage of the fees that their clients pay. Also assume that the investment advisor's goal is to maximize their personal compensation. How would that investment advisor tell their client to invest $10,000, again assuming the investment advisor wants to maximize their own compensation. QUESTION 2 For this question, assume the investment advisor wants to maximize their client's return. How would that investment advisor tell their client to invest $10,000, again assuming the investment advisor wants to maximize their client's returns. The table below describes two alternative investments: Fund 1 and Fund 2. The table also provides the annual fee a client pays for investing in that fund, the return that fund has generated since inception, and the expected future return. Index Funds S&P Index Fund 1 S&P Index Fund 2 Annual Fee Return Since Inception 10.0% 8.0% 0.75% 0.25% Expected Future Return 9.0% 9.0% QUESTION 1 Assume an investment advisor's compensation is calculated as a percentage of the fees that their clients pay. Also assume that the investment advisor's goal is to maximize their personal compensation. How would that investment advisor tell their client to invest $10,000, again assuming the investment advisor wants to maximize their own compensation. QUESTION 2 For this question, assume the investment advisor wants to maximize their client's return. How would that investment advisor tell their client to invest $10,000, again assuming the investment advisor wants to maximize their client's returns.

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