Deck 11: Ethics in Finance

Question 1

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

Answer 1

Not Answer

Question 2

Takeover offers must now be accompanied by enough time so that____________.

A) a. shareholders have opportunity to consider the offer carefully
B) b. consumers can decide whether to buy stock in the company
C) c. abusive tender offers can be rescinded by government action
D) d. there can be an orderly transition of control

Answer 2

A

Question 3

Doing business in the financial markets most fundamentally presupposes that will be respected.

A) power
B) fairness
C) freedom
D) ideas

Answer 3

B

Question 4

If people in financial markets have unequal access to information,____________.

A) it is always unfair
B) this can happen in spite of their expertise
C) it should not impact their ability to make good decisions
D) a law has probably been broken

Question 5

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

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____________.

A) suitable
B) liquid
C) cheapest
D) least risky

Question 7

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

Question 8

Financial service people are most fundamentally in the business of selling____________.

A) savings
B) investments
C) stocks
D) bonds

Question 9

Agreements reached in financial trading are generally considered fair as long as .

A) everyone profits from the exchange
B) all traders involved are professionals
C) everyone has the same information
D) they are reached through good-faith bargaining

Question 10

Efficiency in financial markets means that____________.

A) social well-being will be maximized
B) all investments will keep their value
C) overall yields will increase
D) fairness will always be maintained

Question 11

Financial dealings most fundamentally require the value of____________.

A) freedom
B) time
C) trust
D) competence

Question 12

A financial broker may be tempted to "churn" because by doing so they can .

A) sell more shares
B) artificially inflate yields
C) get more customers
D) earn additional commissions

Question 13

Deception is an ever-present danger in financial selling mostly because____________.

A) the customer has to rely on the seller for all of the relevant information
B) financial salespeople often do not know very much about the securities they sell
C) there are not many laws that regulate financial services
D) no one ever has all the information at a given time