In Hodgkinson V

question 24

Multiple Choice

In Hodgkinson v. Simms, an accountant advised a client to invest in a real estate development while also acting for the developers. What did the Supreme Court of Canada find?

• A) The presence of a financial risk was the identifying feature of a fiduciary relationship and, in this case, imposed the fiduciary duty.
• B) The presence of a financial risk was the identifying feature of a fiduciary relationship but, in this case, did not impose a fiduciary duty.
• C) The presence of loyalty, trust, and confidence were identifying features of a fiduciary relationship and, in this case, imposed the fiduciary duty.
• D) A fiduciary relationship could not arise in circumstances where an investor acted of his own accord.
• E) A fiduciary relationship could not arise in commercial circumstances, such as those found in this case.

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Definitions:

Risk-Averse Investor

An investor who prefers lower risks, often accepting lower returns to avoid potential losses.

Risky Asset

A type of financial instrument or investment that carries a higher degree of risk, potentially leading to greater returns or significant losses.

Risk Free Asset

An investment with a guaranteed return and no risk of financial loss, typically government bonds.

Expected Returns

The anticipated profit or yield from an investment, considering both the risk and the return.