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Recommended: Principles of supervision
Introduction
Capital market is constituted of both primary and secondary markets all of which provide long-term investment opportunities. They are markets for long term funds with maturity period of more than one year. Examples of Financial instruments which are used in capital markets are debentures, terms, loans, bonds, warrants, preference shares and ordinary shares among others. These markets constitute of bond market and stock market in which debts and equity securities are traded respectively. Subsequently, capital market serves as a way of allocating the available capital to the most efficient users. Being an investment arena, capital markets usually are in constant control of immense amount of money which is usually contributed by investors. On the side of investors, they offer their capital contributions to these markets with an overall aim of obtaining the maximum benefits or rewards for their financial contribution within the minimum period possible (Brown, 2005).
In the last five decades, capital markets have attracted a significant number of interested investors. This has been associated with recommendable rewards or compensations which have been exhibited by already in investors. Nevertheless, the existing loopholes in the governing and supervisory rules have exposed investors to a number of risks associated with these investments. According to research surveys which have been carried out in the United States of America, approximately forty percent of American citizens have been shying away from investing in capital market due to previous cases of inappropriate exploitation of investors (Tichy, & McGill, 2003).
Capital market should adhere to equal and even distribution of market information to all market ...
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...r manipulations. For instance, release of biased sensitive market information and manipulation of financial information to lure in new investors. Such factors have adversely affected the integrity expected from capital market centers. Nevertheless, various strategic measures such as formation of supervisory bodies have been embraced to increase integrity and confidence to the investor.
Works Cited
Branson, W H. 1979. Macroeconomic theory and policy, Routledge Publisher, New York.
Brown, M. T. 2005. Corporate integrity: rethinking organizational ethics, and leadership, Cambridge University Press, Cambridge.
O'Brien, J. 2007. Private equity, corporate governance and the dynamics of capital market ..., Imperial College Press
Tichy, N. M., & McGill, A.R. 2003. The ethical challenge: how to lead with unyielding integrity, John Wiley and Son Publishers, London.
The purpose of this paper is to provide a summary of the article called “Can We Keep Our Promises?” by Robert D. Arnott, and to help better understand the three key risks facing each investor.
To apply this system of moral values effectively, one must understand the structural levels at which ethical dilemmas occur, who is involved in the dilemmas, and how a particular decision will affect them. In addition, one must consider how to formulate possible courses of action. Failing in any of these three areas may lead to an ineffective decision, resulting in more pain than cure.” Ken Blanchard states, “Many leaders don’t operate ethically because they don’t understand leadership; these executives may have MBA’s from Ivey League schools or have attended leadership training; they may routinely read the best-selling management books, however, they don’t understand what it means to be a leader.” They don’t model a way of ethical behaviors.
Ponzi schemes are a continuing problem in the investment world and can only be stopped if the Securities and Exchange Commission does better safe guarding investors’ money. This paper will address Bernie Madoff’s Ponzi scheme and how he was able to steal billions of dollars from investors. The reasons why the SEC responded so slowly to Bernie Madoff’s Ponzi scheme, and what can be done in the future to make sure another Ponzi scheme of this magnitude does not happen again. Also included in this paper will be examples of good and bad leadership theories.
Nelson, K., & Trevino, L. (2004). Managing business ethics: Straight talk about how to do it right (3rd ed.). New York: Wiley
Trevino, L., & Nelson, K. (2011). Managing business ethics - straight talk about how to
Thomas N. Barnes Center for Enlisted Education (U.S.) United States. Department of the Air Force. (2012b). Ethical Leadership (LM01). Maxwell-Gunter Annex, AL: Department of the Air Force.
Seawell, Buie 2010, ‘The Content and Practice of Business Ethics’, Good Business, pp. 2-18, viewed 22 October 2013, .
The efficient market hypothesis has been one of the main topics of academic finance research. The efficient market hypotheses also know as the joint hypothesis problem, asserts that financial markets lack solid hard information in making decisions. Efficient market hypothesis claims it is impossible to beat the market because stock market efficiency causes existing share prices to always incorporate and reflect all relevant information . According to efficient market hypothesis stocks always trade at their fair value on stock exchanges, making it impossible for investors to either purchase undervalued stocks or sell stocks for inflated prices. As such, it should be impossible to outperform the overall market through expert stock selection or market timing, and that the only way an investor can possibly obtain higher returns is by purchasing riskier investments . In reality once cannot always achieve returns in excess of average market return on a risk-adjusted basis. They have been numerous arguments against the efficient market hypothesis. Some researches point out the fact financial theories are subjective, in other words they are ideas that try to explain how markets work and behave.
Ciulla, Joanne B., Clancy W. Martin, and Robert C. Solomon. Honest Work: a Business Ethics Reader. 2nd ed. New York: Oxford UP, 2011. Print.
During the 1920s, approximately 20 million Americans took advantage of post-war prosperity by purchasing shares of stock in various securities exchanges. When the stock market crashed in 1929, the fortunes of many investors were lost. In addition, banks lost great sums of money in the Crash because they had invested heavily in the markets. When people feared their banks might not be able to pay back the money that depositors had in their accounts, a “run” on the banking system caused many bank failures. After the crash, public confidence in the market and the economy fell sharply. In response, Congress held hearings to identify the problems and look for solutions; the answer was found in the new SEC. The Commission was established in 1934 to enforce new securities laws that were passed with the Securities Act of 1933 and the Securities Exchange Act of 1934. The two new laws stated that “Companies publicly offering securities must tell the public the truth about their businesses, the securities they are selling and the risks involved in the investing.” Secondly, “People who sell and trade securities must treat investors fairly and honestly, putting investors’ interests first.”2
Capital Asset Pricing Model (CAPM) is an ex ante concept, which is built on the portfolio theory established by Markowitz (Bhatnagar and Ramlogan 2012). It enhances the understanding of elements of asset prices, specifically the linear relationship between risk and expected return (Perold 2004). The direct correlation between risk and return is well defined by the security market line (SML), where market risk of an asset is associated with the return and risk of the market along with the risk free rate to estimate expected return on an asset (Watson and Head 1998 cited in Laubscher 2002).
Howells, Peter., Bain, Keith 2000, Financial Markets and Institutions, 3rd edn, Henry King Ltd., Great Britain.
Our understanding and the concept of investment in behavioural finance combines economics and psychology to analyse how and why investors make final decision. As an investor one’s decision to invest is fully influence by different type of attitudes of behavioural and psychological ( Ricciardi & Simon, 2000). Yet, in order to maximize their financial goal, investors must have a good investment planning. Furthermore , to gain a good investment planning , there must be a good decision making among investors. They have to choose the right investment plan I order to manage the resources for different type of investments not only to gain profit wise but also to avoid the risk that occur from investment.
I am currently majoring in Finance Management. Most of the time people think of finance as just managing money. However, finance is needed for so much more! The finance industry deals with starting businesses, developing new products, expanding markets, as well as everyday things like saving for retirement, purchasing a home, and even insurance. The stock market, asset allocation, portfolio analysis, and electronic commerce are all key aspects in finance. In this paper, I will explain how these features play a vital role in the industry, along with the issues that come with these factors.