a. As an employee of the stock exchange market, explain to a group of investors five securities they could trade in.
b. State five duties of an agent to his principal.
Explanation
a- Stocks: stocks represents ownership shares in a company. Investors can buy and sell stocks on the stock exchange, aiming to profit from price fluctuations or receive dividends based on the company's performance.
- Bonds: bonds are debt securities isued by government, munipals, or corporations. Investors lend money to the issuer in exchange for periodic interest payments and the return of the principal amount at maturity.
- Exchange-Traded Funds (ETFs): ETFs are investment funds traded on stock exchanges. They represent a basket of securities, such as stocks, bonds, or commodities. Investors can trade EFTs like stocks, offering diversification and flexibility in their investment portfolios.
- Mutual Funds: Mutual funds pool money from multiple investors to invest in a diversified portfolio of stocks, bonds or other securities. Investors can buy or sell mutual fund shares at the net asset value (NAV) at the end of the trading day.
- Options: Options are derivaties securities that provide the right, but not the obligation, to buy (call option) or sell (put option) an underlying asset at a predetermined price within a specific time period. Investors can trade options to speculative on price movements or manage risk in their investment positions.
b - Loyalty: an agent has a duty to act in the best interests of the principal and to avoid conflicts of interest. They should prioritize the principal's goals and not engage in activities that would harm the pricipal or benefit themeselves at the principal's expense.
- Obeidience: an agent is obligated to follow the lawful instructions and directives of the principal, as long as they within the scope of the agency relationship. The agent should carry out the principal's wishes and act in accordance with their experience desires.
- Skill and competence: an agent has a duty to perform their tasks with a reasonable level of skill, care, and necessary knowlege, qualifications, nad experience to fulfil their obligations and responsibilities to the principal.
- Disclosure of information: an agent has a duty to provide accurate and complete information to the principal regarding all relevant matters related to the agency relationships. This includes disclosing any conflicts of interest, potential risks, or material information that may impact the principal's decision.
- Accounting and financial responsibility: an agent is responsible for managing the principal's assets, funds, or resources enstruted to them. They have a duty to maintain accurate records, provide regular accounting statements, and handle the principal's financial affairs in a responsible and transport manner.