______ are sold through a securities dealer and have a sales ...

[ssal]

______ are sold through a securities dealer and have a sales commission of some percentage of the price.
 a. open mutual funds
  b. limited mutual funds c. no-load mutual funds d. fixed mutual funds
  e. none of the other choices are correct

Question 2

Entrustment Rule. Bobby Locke, the principal stockholder and chief executive officer (CEO) of Worthco Farm Center, Inc, hired Mr. Hobby as the company's manager. Subsequently, it was discovered that during the approximately thirteen months of Locke's tenure as CEO, Hobby had sold corn stored with Worthco to Arabi Grain & Elevator Co and pocketed the proceeds. When Locke brought an action against Arabi to recover the corn, Arabi alleged, among other things, that Locke had entrusted the corn to Hobby and that because Arabi was a purchaser in the ordinary course of business, Hobby had transferred ownership rights in the corn to Arabi. Assuming that Arabi was a buyer in the ordinary course of business, how should the court rule? Discuss.

[JaynaD87]

Answer to Question 1

e

Answer to Question 2

Entrustment rule
The trial court held that Bobby Locke could not recover from the Arabi Grain & Elevator Co., concluding that Worthco Farm Center, Inc., had entrusted the corn to Hobby, as the manager, and that thus, Hobby had the power to transfer all of Worthco's rights to the corn to elevator company. The appellate court agreed with the trial court. Under the UCC, entrusting property can result in the owner's loss of title to the property if the entrustee is a merchant who deals in similar goods. A merchant who deals in goods of the same kind as those entrusted is empowered to convey the same title as that held by the entrustor to a buyer in the ordinary course of business. This protects buyers who may be unaware of the risk that the property is owned by another person. But this also limits the original owner's remedy to seeking recovery for the value of the goods from the merchant. The court said, The protection afforded the pur-chaser is merely a special application of the broad equitable principle that where one of two innocent persons must suffer loss by reason of the fraud or deceit of another, the loss should rightly fall upon him by whose act or omission the wrongdoer has been enabled to commit the fraud.'

[ssal]

TYSM

[Chelseyj.hasty]

Excellent