A Prospective PFP Client Comes to You with an Investment

question 6

Multiple Choice

A prospective PFP client comes to you with an investment statement.The first page of the statement,which contained the initial investment amount of a mutual fund purchased five years ago,is missing,and as a result the initial cash flow is -0-.The initial investment of the mutual fund can be determined based on the following information provided in the investment statement.The statement indicates that the five-year return for the investment was 10 percent.
Year 1: capital gain and dividend were $100
Year 2: capital gain and dividend year were $150
Year 3: no capital gain or dividend paid and the client invested $1,000
Year 4: no capital gain or dividend paid
Year 5: no capital gain or dividend paid and the client sold out of his position for $18,000

• A)8,484.2598.
• B)10,640.1450.
• C)11,574.3498.
• D)11,487.3091.

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Definitions:

Choice-of-Law Clause

A provision in a contract that specifies which jurisdiction's laws will be applied to interpret the contract.

Breach of Contract

The failure of one party to fulfill the terms agreed upon in a contract, justifying legal action for enforcement or damages by the other party.

Contract Disputes

Disagreements that arise over the terms, conditions, or performance of a legally binding agreement between parties.

Federal Court

courts established by the constitution or laws of the United States that have jurisdiction over federal laws, interstate matters, and other specific cases.