1. The U.S. financial system is composed of: (1) policy makers, (2) a monetary system, (3) financial institutions, and (4) financial markets. Indicate which of these components is associated with each of the following roles:
a. accumulate and lend/invest savings: (3) financial institutions
b. create and transfer money: (2) a monetary system,
c. pass laws and set fiscal and monetary policies: (1) policy makers
d. market and facilitate transfer of financial assets: (4) financial markets
2. Financial markets may be categorized as: (1) debt securities markets, (2) equity securities markets, (3) derivative securities markets, and (4) foreign exchange markets. Indicate in which of these markets the following securities trade:
a. residential mortgages: : (1) debt securities markets
b. corporate bonds: (3) derivative securities markets
c. corporate stocks: (2) equity securities markets
d. currencies: (4) foreign exchange markets
3. In business, ethical dilemmas or situations occur frequently. Laws and regulations exist to define what unethical behavior is. However, the practicing of high-quality ethical behavior often goes beyond just meeting laws and regulations. Indicate how you would respond to the following situations.
a. Your boss has just told you that tomorrow the Federal Drug Administration will announce its approval of your firm’s marketing of a new breakthrough drug. As a result of this information, you are considering purchasing shares of stock in your firm this afternoon. What would you do?
While I would love the quick score, I would not purchase this stock because of the tip I received. It’s unethical to get insider information from any company. The financial personal gain through using non public information would be abusing my position in the company and is illegal. It is a violation of federal securities laws. If this truly is a good deal, then I should purchase after it is known to the public officially and legally.
b. In the past, your firm has been in compliance with regulatory standards relating to product safety. However, you have heard through the company grapevine that recently some of your firm’s products have failed resulting in injuries to customers. You are considering quitting your job due to personal moral concerns. What would you do?
Regardless of the information from the grapevine, I need to look at my heart and measure my motives. If I am working in an environment where I feel ashamed, guilty, or unethical, I need to measure my feelings against my morals. In this case I would most likely resign. I would keep my resignation healthy and formal citing my reasons for leaving are personal and motivated by some changes I need to make in my life. I would neither bad mouth the company, nor stoop to the gossip level of the grapevine. This would allow me to leave with a clear conscious and not have to look over my shoulder at a burnt bridge.
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