A broker tells you he has outperformed the market by trading on insider information in the Hong Kong market. As a broker yourself, you should respond to this situation by which of the following? A) Not asking for information as any arbitrage opportunities would now have passed. B) Not asking for information and reporting it to the regulator as it is an illegal activity in Hong Kong. C) Asking for information so that you can trade based on that information. D) Asking for information so that a client can trade based on that information.

A broker tells you he has outperformed the market by trading on insider information in the Hong Kong market. As a broker yourself, you should respond to this situation by which of the following? A) Not asking for information as any arbitrage opportunities would now have passed. B) Not asking for information and reporting it to the regulator as it is an illegal activity in Hong Kong. C) Asking for information so that you can trade based on that information. D) Asking for information so that a client can trade based on that information.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation

Section: Chapter Questions

Problem 5Q

See similar textbooks

Similar questions

Indeed, there is the view that market abuse and insider dealing are not immoral and are victimless crimes. Others stated that insider trading had the capacity to significantly undermine the integrity and efficiency of the relevant securities markets. Do you think that insider trading should be regulated or not by the Government? Do you think that insider trading is occurring in Antigua and Barbuda? Critically discuss.
Indeed, there is the view that market abuse and insider dealing are not immoral and are victimless crimes. Others stated that insider trading, had the capacity to significantly undermine the integrity and efficiency of the relevant securities markets. Critically discuss the concept of “insider trading”. Identify and discuss two (2) actual or alleged insider trading that have occurred in the Caribbean. Identify 5 international insider trading cases, critically discussing the mentioned cases and the outcome. Do you think that insider trading should be regulated or not by the Government? Based on your research above, do you think that insider trading is occurring in your country? Critically discuss.
Customers get ‘screwed’ in the foreign exchange market because they pay brokerage fees. are charged administrative fees. buy at a higher rate than what they sell at. act on the basis of incomplete information.
If an investment bank offers both underwriting/distribution functions and investment advisory or management functions, which situation would be acceptable under U.S. Securities and Exchange regulations and ethics guidelines with regard to material non-public information (MNPI)? Allowing MNPI acquired in the sell side of the business to influence the recommendations made by the buy side of the business. Trading of personal securities based on MNPI available only to the buy side of the business and not to the sell side due to a "wall." "Bringing someone over the wall" to provide value to underwriting, who does not comment on MNPI until it has been made public. Acquiring MNPI in the buy side of the business and disseminating it to the sell side of the business.
Before entering a formal agreement, investment banks carefully investigatethe companies whose securities they underwrite; this is especially true of theissues of firms going public for the first time. Because the banks do not themselves plan to hold the securities but intend to sell them to others as soon aspossible, why are they so concerned about making careful investigations?
A broker tells you that he has continuously outperformed the market by trading on publicly available information in the Hong Kong market. According to the Efficient Market Hypothesis, what would this imply? A) The market is weak form efficient. B) The market is semi-strong form efficient. C) The market is strong form efficient. D) The market is not efficient.
What unfortunate lesson did the auditors learn from the situation in the Unregistered Sale of Securities case? What should auditors do when a violation of U.S. securities laws is suspected?
Do you think that insider trading is occurring in Antigua and Barbuda?
Financial institutions engage in the purchasing and selling of foreign currencies for all of the following reasons except to: a. Hedge against foreign exchange exposures. b. Allow customers access to foreign markets to transact business. c. Avoid trading in speculative investments. d. Allow itself and/or customers to trade and invest in foreign financial markets.
Deciding to trade in financial products because of access to non-material non-public information. A.Would ve regarded as engaging in information-based manipulation. B.Is unacceptable conduct as it will breach CFA standards. C.Would likely be a breach of the Corporations Act in Australia. D.Is a acceptable as it would be consistent with the use of mosaic theory. In accordance with CFA standard I(B) members must: A.May accept gifts or bonuses from clients while exercising professional judgement to ensure independence and objectivity is not threatened. B.Always accept gifts or bonuses from clients. C.Never accept gifts or bonuses from clients. D.Accept gifts not only if it is in the member of employ’s interest to do so.
Wall Street firms have traditionally compensated their traders with a share of the trading profits that they generated. How might this practice have affected traders’ willingness to assume risk? What is the agency problem this practice engendered?
Mr. Salim is the owner of an audit firm who audit the financial statements of the companies by charging fee. Lulu hypermarket is one of their old clients. Last month lulu hypermarket distributed discount coupon to their customers and it was a coincident that external auditors were also there, and they also got some coupons. Which of the following threat do you think can arise in this situation? a. Familiarity threat b. None of the options c. Self-interest threat d. Self-review threat