1. Identify the three types of players in the investment industry, and describe each of their roles.
2. What financial crisis led to the creation of the SEC?
3. What are three characteristics of the investment industry that make it easy for ethical lapses to occur?
4. Why does the SEC have a strong emphasis on information chsciosure:
5. If you are like most students, unfortunately you have encountered some type of student cheating. Make a list of some ways that students can cheat-including things students do to gain an advantage in earning a grade in a course, but that not everyone considers cheating. Next, explain why each item you listed should be considered cheating, and why it should not. In your explanations, identify who is potentially hurt by each type of cheating.
6. Identify three reasons that fulfilling fiduciary duty can be difficult in the investment profession.
7. Explain the difference between a fiduciary and an agency relationship. Why is confidentiality important in money management relationships?
8. Identify five questions a money manager should ask before recommending suitable investments for a client.
9. Why is holding horizon important in determining suitability of investments?
10. Explain how soft dollars can align the interests of the client, the money manager, and the broker.
11. Oftentimes, not all funds are invested. For example, the portfolio manager doesn't want to invest all the funds at once but rather slowly invest so that he or she doesn't get caught investing at the top of the market. Funds held as cash and included in performance measures will lower returns and are sometimes known as "cash drag." Should fund managers include or exclude cash from performance measures?
What does excluding them measure? What does including them measure? What are the ethical issues here?