Chapter 1, Ethics And Integrity Flashcards
(18 cards)
What are the four key principles?
- Was your action honest?
- Was your action open?
- Was your action transparent?
- Was your action fair?
What is an example of a lack of integrity in financial services?
The rigging of the LIBOR (London Interbank Offered Rate) interest rate setting mechanism
What does a benchmark interest rate allow for?
The benchmark is used for setting the price of government and corporate bonds, mortgages, student loans, credit cards and other financial products
What does falsely inflation or deflating interest rates do for a firm?
- Profits from trades
- Gives the impression of being more creditworthy
Negative effects of in/delfating intrest rates?
Significant negative effects on consumers and financial markets
What will an ethical salesperson do?
Take you through the structure of the product offered in such a manner that you may be reasonably sure that you understand what it is and from whom you are buying
What is the ESG?
- Environmental
- Social
- Governance
What are environmental criteria?
- How much energy used
- Responsibility in conserving energy
- Minimising waste/pollution
- Conservation efforts
- Impact on natural world
What is social criteria?
- Supporting local community
- Charitable contributions made
- Health and safety of workforce
- Values encouraged/required (working conditions)
(Corporate) Governance criteria?
- Diversity of company (age, experience, ethnicity, gender)
- Balance between directors
- Values and ethical expectations (particularly in senior management)
What is responsible investment?
Using ethical criteria is distinguish between acceptable and unacceptable investement, and what benefits the environment and society
What type of companies would investors avoid?
Companies involved in tobacco, gambling, production of alcoholic drinks, and weapons
Why may investors avoid certain companies?
Due tot he environmental, or social harm it may cause
What is impact investing?
Targets having a positive impact on society or the environment as well as financial return
How does impact investing benefit investors?
Teaches them to invest with a conscience in the knowledge that their investment will make a favourable difference
What is the gender lens?
Focusing on investments that will promote gender equality (providing opportunities to women)
Examples of the gender lens?
- Providing capital to enable women to launch or expand their businesses
- Help fund products and services that benefit women and girls
- Equality in working conditions
- Equal pay
What is microfinance?
Tries to make an impact on low income or unemployed individuals, often targeting developing or under-developed countries
