Discussion Questions

Topics: Financial markets, Stock market, U.S. Securities and Exchange Commission Pages: 2 (527 words) Published: March 8, 2013
Discussion Questions

Week One Discussion Questions (Due - March 5)

* What is the capital market? How is the primary market different from the secondary market? In your opinion, are these markets efficient? Why?

Capital market is a financial market that as a conduit for demand and supply of debt and equity capital. It channels the money provided by savers and depository institutions (banks, credit unions, insurance companies, etc.) to borrowers and investees through a variety of financial instruments (bonds, notes, shares) called securities (businessdictionary.com, 2013). Primary market is that part of the capital markets that deals with the issue of new securities. In the primary market the security is purchased directly from the issuer and secondary market is a market in which an investor purchases a security from another investor rather than the issuer, subsequent to the original issuance in the primary market (businessdictioary.com, 2013). Yes, for example the stock market is an efficient market. All of this market important information is ready for use to all the shareholders at the same time, and where prices respond right away to available information.

What are three primary roles of the U.S. Securities and Exchange Commission (SEC)? How does the Sarbanes-Oxley Act of 2002 augment the SEC’s role in managing financial governance? Do you think businesses became more ethical after Sarbanes-Oxley was passed? Provide examples to support your answer.

Three primary roles of the U.S. Securities and Exchange Commission (SEC) are “protecting investors, maintaining fair, orderly and efficient markets, and facilitating capital formation” (Wallechinsky, 2012). The SOX Act of 2002 augment SEC’s roles in managing financial governance by establishing a new public agency which is charged with overseeing, regulating, inspecting, and disciplining accounting firms in their roles as auditors of public companies. SOX also blankets issues such as...
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