Fact Pattern 3-2 Ellen Contracts with James to Be Her Stockbroker, Making Stock

question 54

Multiple Choice

Fact Pattern 3-2
Ellen contracts with James to be her stockbroker, making stock trades for Ellen's account. Ellen need not pre-approve the trades that James makes, only trades for more than $20,000. Ellen and James include a clause stating "that in case of any disputes arising out of this contract; the dispute shall be arbitrated using the rules of the New York Stock Exchange."
Ellen learns that since signing her contract with James, he has routinely been making trades worth more than $20,000 without her permission, and losing money.
-Refer to Fact Pattern 3-2. If Ellen and James were to mediate their dispute, rather than arbitrate (assume this is ok) , what would they need to do?

• A) select a mutually agreed upon mediator
• B) present their dispute to a court
• C) get a court to select an arbitrator
• D) nothing besides sitting down together
• E) prepare a brief for consideration of a panel

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Definitions:

Growing Annuity

A finite number of growing annual cash flows.

Cash Flow Growth Rate

The rate at which a company's cash flow increases over a specified period, indicating the health and profitability of the business.

Required Rate of Return

The minimal annual revenue percentage that stimulates individuals or companies to direct their funds into a particular security or undertaking.

Borrow

To take or receive something with the intention of returning it, often referring to money with an obligation to pay back the original amount plus interest.