Fin/370 Week 1 Discussion Questions
FIN 370 – Finance for Business Weekly Discussion Questions Template Name: Please answer the following questions on this template and submit as your assignment for the Weekly Discussion Questions. Week One Discussion Questions
What is the capital market? How is the primary market different from the secondary market? In your opinion, are these markets efficient? Why? * * A place where stocks and bonds are traded; and long-term financial instruments is called the capital market. The primary market is when companies raise money for itself for things such as initial business start-up costs. The secondary market is where all other trading and investing takes place and securities are invested from one investor to another. These markets can be efficient if used correctly. If these markets were not used, there would be less of a demand for financial securities. *
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. * * The three primary roles of the SEC are to protect investors; maintain fair, orderly and efficient markets; and facilitate capital formation. The SOX Act of 2002 was implemented to regulate ethical business transactions concerning business accounting reporting standards. The Act is to minimize accounting scandals such as Enron, Tyco International, WorldCom, and many other financial institutions and businesses. Yes, businesses became more ethical after the SOX Act was implemented because companies are inspected and held to a higher accountablility standard if the regulations are not adhered to. *
What ratios measure a corporation’s liquidity? What are some problems associated with using such ratios? How would the DuPont analysis overcome these problems? *
What is the capital market? How is the primary market different from the secondary market? In your opinion, are these markets efficient? Why? * * A place where stocks and bonds are traded; and long-term financial instruments is called the capital market. The primary market is when companies raise money for itself for things such as initial business start-up costs. The secondary market is where all other trading and investing takes place and securities are invested from one investor to another. These markets can be efficient if used correctly. If these markets were not used, there would be less of a demand for financial securities. *
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. * * The three primary roles of the SEC are to protect investors; maintain fair, orderly and efficient markets; and facilitate capital formation. The SOX Act of 2002 was implemented to regulate ethical business transactions concerning business accounting reporting standards. The Act is to minimize accounting scandals such as Enron, Tyco International, WorldCom, and many other financial institutions and businesses. Yes, businesses became more ethical after the SOX Act was implemented because companies are inspected and held to a higher accountablility standard if the regulations are not adhered to. *
What ratios measure a corporation’s liquidity? What are some problems associated with using such ratios? How would the DuPont analysis overcome these problems? *