Regulations and Ethics in the Investment Industry Quiz
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Questions and Answers

What does ethical conduct encompass according to the text?

  • Following a simple algorithm or formula
  • What different societal groups consider to be ethically correct behavior (correct)
  • Only what is legally required
  • Strict adherence to laws and regulations

What is required to act ethically according to the text?

  • The ability to think through the facts of the situation and make good choices (correct)
  • Clear laws or rules
  • Following a prescribed algorithm
  • Strict adherence to laws or rules

What is necessary for good ethical judgment according to the text?

  • Ignoring the interests of stakeholders
  • Strict adherence to laws and regulations
  • Following a prescribed algorithm
  • Actively considering the interests of stakeholders (correct)

What is emphasized as a requirement for ethical behavior according to the text?

<p>The ability to make considered decisions (D)</p> Signup and view all the answers

What is mentioned as going beyond what is legally required according to the text?

<p>Ethical conduct (A)</p> Signup and view all the answers

What is indicated as insufficient to ensure the ethical behavior of investment professionals and market participants?

<p>Laws and regulations (D)</p> Signup and view all the answers

What does ethics require according to the text?

<p>Actively considering the interests of stakeholders (B)</p> Signup and view all the answers

What is a potential downside of using laws to reduce unethical behavior in the investment industry?

<p>Laws may be vague, conflicting, and too narrow in scope (D)</p> Signup and view all the answers

What challenge arises due to the time taken for regulators' responses to enact new laws?

<p>Problematic practices may continue or grow during the time taken for enacting new laws (C)</p> Signup and view all the answers

How do market participants may interpret laws, according to the text?

<p>In the most advantageous way possible (A)</p> Signup and view all the answers

What is a consequence of laws varying across countries or jurisdictions?

<p>Questionable practices may move to places with lax laws (B)</p> Signup and view all the answers

Why may increased regulation and monitoring not always be the best mechanism to reduce unethical behavior?

<p>Regulators' responses may take significant time (D)</p> Signup and view all the answers

What is a potential drawback of a new law reducing or eliminating existing activity?

<p>It may simultaneously create an opportunity for a different, but similarly problematic, activity (D)</p> Signup and view all the answers

What is a potential issue with laws being subject to interpretation and compliance by market participants?

<p>Market participants may delay compliance until a later date (D)</p> Signup and view all the answers

What is a drawback of laws designed reactively in response to a crisis?

<p>They may take significant time to be enacted (C)</p> Signup and view all the answers

What is a potential consequence of laws being subject to interpretation by market participants?

<p>Market participants may interpret the law in the most advantageous way possible (B)</p> Signup and view all the answers

What is a challenge associated with laws varying across countries or jurisdictions?

<p>Questionable practices may move to places that lack relevant laws (A)</p> Signup and view all the answers

What is a potential downside of using laws to reduce unethical behavior in the investment industry?

<p>Laws may inadvertently create opportunities for different problematic activities (C)</p> Signup and view all the answers

What is a drawback of laws designed proactively to address existing or anticipated practices?

<p>Laws may be too narrow in scope (D)</p> Signup and view all the answers

What is a potential issue with laws that follow market practices?

<p>Laws may not always address existing or anticipated practices (B)</p> Signup and view all the answers

What is a consequence of laws being subject to compliance by market participants?

<p>Market participants may choose to interpret the law in the most advantageous way possible (D)</p> Signup and view all the answers

What does ethical conduct go beyond according to the text?

<p>Legal requirements (D)</p> Signup and view all the answers

What is emphasized as necessary for acting ethically according to the text?

<p>Good choices in the absence of clear laws or rules (D)</p> Signup and view all the answers

What is indicated as insufficient to ensure ethical behavior of investment professionals and market participants?

<p>Laws and regulations (B)</p> Signup and view all the answers

What does good ethical judgment require according to the text?

<p>Actively considering the interests of stakeholders (D)</p> Signup and view all the answers

Why is increased regulation and monitoring not always the best mechanism to reduce unethical behavior according to the text?

<p>There is no simple algorithm for ethical action (B)</p> Signup and view all the answers

What is a potential issue with laws being subject to interpretation and compliance by market participants?

<p>Varying laws across countries or jurisdictions (D)</p> Signup and view all the answers

What is mentioned as a consequence of laws varying across countries or jurisdictions?

<p>Ethical conduct going beyond legal requirements (A)</p> Signup and view all the answers

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