You are a new financial adviser and have been contacted by Mary Smith for advice. You work for a fim who charges a management fee of 1% of the assets under management for managing client accounts. After meeting with her, you have assessed her risk tolerance which shows she is relatively risk averse and have proposed a SOX/50% stock/bond, portfolio allocation for her investments, She has agreed to this allocation and says that she recently received $100,000 from her favorite aunt's estate upon her death. She is looking to invest these funds. 1. You have told Mary that you operate in a fiduciary capacity for your clients and she asks what that means. What does this mean? Why would this be important to her? 2. You talk to her about investing these funds when she receives them. Would you invest these funds all at once? Or, over a 6 month time frame? Why? 3. You then discuss investments and recommend using mutual funds rather than trying to buy individual securities. What three reasons would you give her for using mutual funds? (less risk is not one of them). You tell her that she can invest her stock allocation in stock mutual funds that are either no-load funds or load funds with a 3% front end load (sales people receive 1/3 of the load as a commission). Both have similar returns and the no-load funds actually have lower expense ratios The NAV (Net Asset Value) of these funds are $50/share. . How many shares in the no load fund would she purchase b. How many shares of the load fund would she purchase? c. Acting in a fiduciary capacity, should you recommend she purchase the no-load or load funds? 5. The bond funds you have recommended are municipal bond funds vielding 2.3%. She is in the 24% federal tax rate and wants to know if she should invest in similar grade corporate bonds. What would be a comparable taxable rate on the corporate bonds given her tax rate and the muni tax free yield