Joseph is the sole trustee of a trust fund of $1,000,000. By the terms of the trust, he is under a duty to invest the money ‘as if he were absolutely entitled to the assets of the trust’. He is approached by Ronald, an investment broker, who offers to pay him $100,000 ‘no questions asked’ if he invests the trust fund with him. Joseph agrees, and is paid the $100,000. Ronald invests the $1,000,000 on the stock market, eventually making a loss of $700,000. With only $300,000 remaining, Joseph is now insolvent and Ronald has fled the country. Advise the beneficiaries of the trust.
Joseph is the sole trustee of a trust fund of $1,000,000. By the terms of the trust, he is under a duty to invest the money ‘as if he were absolutely entitled to the assets of the trust’. He is approached by Ronald, an investment broker, who offers to pay him $100,000 ‘no questions asked’ if he invests the trust fund with him. Joseph agrees, and is paid the $100,000. Ronald invests the $1,000,000 on the stock market, eventually making a loss of $700,000. With only $300,000 remaining, Joseph is now insolvent and Ronald has fled the country. Advise the beneficiaries of the trust.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Joseph is the sole trustee of a trust fund of $1,000,000. By the terms of the trust, he is under a duty to invest the money ‘as if he were absolutely entitled to the assets of the trust’. He is approached by Ronald, an investment broker, who offers to pay him $100,000 ‘no questions asked’ if he invests the trust fund with him. Joseph agrees, and is paid the $100,000. Ronald invests the $1,000,000 on the stock market, eventually making a loss of $700,000.
With only $300,000 remaining, Joseph is now insolvent and Ronald has fled the country.
Advise the beneficiaries of the trust.
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