Would it have stopped you from investing in mutual funds

Assignment Help Financial Management

Reference no: EM131301332

Ethical Dilemma. In the past, some mutual funds often engaged in a practice called "afterhours trading" that allowed some of their larger shareholders to reap profits or avoid losses in a manner not available to all investors. To understand how this practice works, one must remember that mutual fund prices (NAVs) are based on the underlying prices of the securities in which they are invested. Mutual fund prices are established each day at 4 p.m. Eastern Time, when the market closes.

For this reason, mutual fund orders to buy or sell must be placed by investors prior to 4 p.m. The after-hours trading practice allowed certain large investors the opportunity to place and execute mutual fund trades after 4 p.m. Thus, if a news release occurred at 5 p.m. that would have a detrimental effect on the stock of a company held by a mutual fund, a large investor could sell the mutual fund shares based on a price prior to the announcement, and therefore avoid a potential loss.

a. Discuss the ethics of this practice.

b. If you knew about this practice, would it have stopped you from investing in mutual funds? Discuss.

Reference no: EM131301332

Questions Cloud

Create set of essential soft skills that each pm should have : Create a set of essential "soft skills" that each PM should have and describe what each item is and why it is important for a PM. Your set of essential skills should include at least 10 items.

Availability of credit cards so peopleneed to hold less cash : Carefully explain the impact on the money demand, money supply, equilibrium interestrate and the quantity of money due to each of the following:[Diagrams not required] (a) The changes in bank regulations expand the availability of credit cards so p..

Does the company avoid over promising and overselling : How well do all company communications -including the interactions between company employees and customers - express the same message and level of service quality? How well does the company - express the same message and level of service quality? ..

Implement the register file in idecode : To perform two reads, use two Altsyncrams that contain the same data (i.e. always write to both blocks).

Would it have stopped you from investing in mutual funds : Discuss the ethics of this practice.- If you knew about this practice, would it have stopped you from investing in mutual funds? Discuss.

Describe the application of the management concepts : Analyze the application of these management concepts to your place of work; the paper will not simply be a report on the five functions in general.

Who presented the idea for the first index fund : Who presented the idea for the first index fund? What was the purpose for which s/he created the fund?- How will the expense ratio of an index fund compare to that of an average fund?

Analyze the influence that legal issues have had on planning : Analyze the influence that legal issues, ethics, and corporate social responsibility have had on management planning. Provide at least one example for each.

What are the most important internal control principles : What are the most important internal control principles and procedures being used by View Building to ensure control over cash receipts - Write a memo to management explain whether or not these internal controls are adequate and why and suggest im..

User Account

All Pages