Question 1

Explain why in the context of finance it is so important that customers be empowered to make rational choices.

Accepted Answer

Not Answer

Question 2

Takeover offers must now be accompanied by enough time so that____________.&#10;A) a. shareholders have opportunity to consider the offer carefully&#10;B) b. consumers can decide whether to buy stock in the company&#10;C) c. abusive tender offers can be rescinded by government action&#10;D) d. there can be an orderly transition of control

Accepted Answer

Takeover offers must now be accompanied by enough time so that shareholders have opportunity to consider the offer carefully. This is because it allows for a fair and reasoned evaluation of the offer and gives shareholders enough time to make an informed decision.

Question 3

Doing business in the financial markets most fundamentally presupposes that will be respected.&#10;A) power&#10;B) fairness&#10;C) freedom&#10;D) ideas

Accepted Answer

Doing business in the financial markets requires fairness to ensure that all parties involved are treated equally and ethically. Without this fundamental principle, the financial markets would be plagued with corruption and instability. Power, freedom, and ideas are important components in the financial markets, but they are not as fundamentally important as fairness.

Question 4

If people in financial markets have unequal access to information,____________.&#10;A) it is always unfair&#10;B) this can happen in spite of their expertise&#10;C) it should not impact their ability to make good decisions&#10;D) a law has probably been broken

Accepted Answer

The unequal access to information can happen even with experts, as certain individuals or organizations may have insider information or be privy to information not available to the general public. This can give them an unfair advantage in the market. However, this does not necessarily mean that they will always make good decisions or that a law has been broken.

Question 5

Describe how the ideal of fairness plays out in the financial markets.

Accepted Answer

The answer of Describe how the ideal of fairness plays...

Question 6

Due to the wide variety of financial products available, it is incumbent on the broker to help the customer select those that are____________.&#10;A) suitable&#10;B) liquid&#10;C) cheapest&#10;D) least risky

Accepted Answer

Brokers have a responsibility to ensure that the products they recommend are suitable for their clients, taking into account their financial situation, investment objectives, and risk tolerance. Choosing the least risky or cheapest products may not necessarily be appropriate for the client's needs and could result in poor investment outcomes. Liquidity is also important, but suitability should be the primary consideration.

Question 7

Describe an example of the kind of transaction that a financial advisor might make that does not benefit the client.

Accepted Answer

The answer of Describe an example of the kind of...

Question 8

Financial service people are most fundamentally in the business of selling____________.&#10;A) savings&#10;B) investments&#10;C) stocks&#10;D) bonds

Accepted Answer

While financial service people may sell a variety of products, such as savings accounts, stocks, and bonds, their primary objective is to sell investments that will ultimately generate returns for their clients.

Question 9

Agreements reached in financial trading are generally considered fair as long as .&#10;A) everyone profits from the exchange&#10;B) all traders involved are professionals&#10;C) everyone has the same information&#10;D) they are reached through good-faith bargaining

Accepted Answer

Agreements reached through good-faith bargaining are generally considered fair, regardless of whether or not everyone profits from the exchange or if all traders involved are professionals. While having the same information can contribute to a fair agreement, it is not the sole determining factor.

Question 10

Efficiency in financial markets means that____________.&#10;A) social well-being will be maximized&#10;B) all investments will keep their value&#10;C) overall yields will increase&#10;D) fairness will always be maintained

Accepted Answer

The answer of Efficiency in financial markets means that____________.&#10;A) social...

Question 11

Financial dealings most fundamentally require the value of____________.&#10;A) freedom&#10;B) time&#10;C) trust&#10;D) competence

Accepted Answer

The answer of Financial dealings most fundamentally require the value...

Question 12

A financial broker may be tempted to &#34;churn&#34; because by doing so they can .&#10;A) sell more shares&#10;B) artificially inflate yields&#10;C) get more customers&#10;D) earn additional commissions

Accepted Answer

The answer of A financial broker may be tempted to...

Question 13

Deception is an ever-present danger in financial selling mostly because____________.&#10;A) the customer has to rely on the seller for all of the relevant information&#10;B) financial salespeople often do not know very much about the securities they sell&#10;C) there are not many laws that regulate financial services&#10;D) no one ever has all the information at a given time

Accepted Answer

The answer of Deception is an ever-present danger in financial...

Deck 11: Ethics in Finance