Assignment Details
1. Corporate Governance and Ethics
Businesses and markets require trust to operate efficiently. Without trust, additional laws and regulations are required and all laws and regulations are costly. For a lucid article on ethics and the financial crisis see: “Three Ethical Dimensions of the Financial Crisis,” by Antonio Argandoña. The article may be found at https://media.iese.edu/research/pdfs/DI-0944-E.pdf.
Use your text book and information from the above article to discuss this question:
Is more regulation the answer to corporate governance and ethics failures? Why or why not?
2. Derivative Securities
Discuss options and futures contracts. How are they similar? What are the differences?
3. Mutual Funds
Describe the similarities and differences between “open-end” and “closed-end” mutual funds.
Please number each of your answers. This is very important so that I understand which questions you are responding to.
ANSWER:
Relevant and strict regulations are appropriate for addressing failures in corporate governance and ethics. According to Bodie, Kane & Marcus (2017), the United States Congress responded to ethics scandals in the country by enacting the Sarbanes-Oxley Act. Through the legislation, the United States Congress tightened rules on corporate governance in a way that would reduce the chances of ethical scandals occurring in the future. First, the law requires that organizations must hire independent directors; individuals who are not managers or affiliated to managers, but with enough experience to offer director duties. The law requires that Chief Finance Officers (CFOs) must take a leading role in the prevention of ethical scandals. In this case, they (CFOs) should confirm a firm’s accounting statements before certifying them and allowing them to be used as the correct position of the organization. The CFOs should compose oversight boards to oversee the auditing functions of the organization. In this case, the boards are expected to remain uncompromised and offer unbiased expert opinions on the auditing processes and results. The law passed by Congress also restricts the services that auditors can offer to their clients. In that regard, when appropriate and stringent laws are in place, chances of corporate governance and ethics failures will be continue reading…