#1
Which ethical principle involves treating all stakeholders fairly and impartially?
Fairness
ExplanationFairness ensures equitable treatment for all involved parties.
#2
In financial transactions, what does the acronym KYC stand for?
Know Your Customer
ExplanationKYC mandates knowing the identities of clients to prevent illicit activities.
#3
In ethical financial transactions, what does the acronym AML stand for?
Anti-Money Laundering
ExplanationAML aims to prevent money laundering and illicit financial activities.
#4
In ethical financial transactions, what does the acronym SEC stand for?
Security and Exchange Commission
ExplanationThe SEC oversees securities markets, promoting fair and transparent financial transactions.
#5
Which of the following is a key principle of ethics in financial transactions?
Transparency and honesty
ExplanationEthical transactions require openness and truthfulness in dealings.
#6
What is the role of due diligence in ethical financial transactions?
To assess and mitigate risks
ExplanationDue diligence helps identify and manage potential risks, ensuring ethical conduct.
#7
What is the concept of 'fiduciary duty' in financial transactions?
Acting in the best interest of clients
ExplanationFiduciary duty requires prioritizing clients' interests over personal gain.
#8
Which ethical consideration involves providing accurate and timely financial information to stakeholders?
Transparency
ExplanationTransparency entails offering truthful and timely financial data to stakeholders.
#9
What is the primary purpose of a whistleblower in the context of financial ethics?
Reporting unethical behavior
ExplanationWhistleblowers expose unethical conduct to maintain integrity in financial practices.
#10
What is the term for the practice of using privileged information for personal gain in financial transactions?
Insider trading
ExplanationInsider trading involves exploiting confidential information for personal advantage, violating ethical standards.
#11
What does the term 'front-running' refer to in financial transactions?
Executing trades based on non-public information
ExplanationFront-running involves using privileged information to make trades before others, breaching ethical standards.
#12
What is the ethical significance of 'churning' in financial transactions?
Excessive trading to generate commissions
ExplanationChurning involves excessive trades solely to accrue commissions, disregarding clients' best interests.
#13
What does the term 'Ponzi scheme' represent in financial transactions?
Fraudulent investment scam
ExplanationPonzi schemes deceive investors by using new investments to pay returns to earlier investors, leading to financial collapse.
#14
What is the primary purpose of the 'Sarbanes-Oxley Act' in the context of financial ethics?
Enhancing corporate governance and accountability
ExplanationThe Sarbanes-Oxley Act aims to improve corporate governance and accountability to prevent financial scandals.