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5568 group assignment.docx - Q1: The qualified trade...

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Q1: The qualified trade execution engagedby fund manager should beconsidered in the interest of clients to the greatest extent. Clients always concernwhether the cooperation between the fund managers and brokers maximize thebenefits to clients themselves rather than to managers. However, theprofessional execution will also undertake the consideration of funds value whileit may effect by various economic terms, such as commission rate. Due to thebrokerage regards as a part of clients' belonging, the client may pay moreattention to the operation of the brokerage and finally expect a high return, priorto how the broker run the trade execution. In fact, part of the brokerage called‘soft dollar’ will not be accounted into the client’s property but incorporate to thecommission. The ‘soft dollar’ is used to purchase research by managers duringthe investment decision-making process. Clients suppose to be explicitly noticedbefore any headway making by managers, yet the information are asymmetricholding by different parties. Once being in process, clients will expect the mostvaluable research carried out by the manager with minimum cost.Q2: An investment manager should execute a trade that is beneficial to the clientwhen allocating client brokerage and must always place clients’ interests beforeits own. When it comes to profitability, an investment manager could execute itsfirm’s trade first and then do the client’s. Therefore, this leads to a conflict ofinterest where an investment manager gains an advantage over a client or failsto put the interests of the client first. There could be another circumstance where

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Term
Two
Professor
N/A
Tags
Interest, Financial services, investment manager, Collective investment scheme, Chartered Financial Analyst

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