Concluding Case One Stock Market Games And Dark Side Of Financial Counseling

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Travis Bent
2810301
Admi 202
Professor: Carmen Kuczewski
November 25, 2014
Chapter 19 Concluding Case one Stock market games and dark side of financial advising.
Question 1
What factors determine the market price of a share of stock? Which of those factors were at work in the cases described above? Bernie Madoff admitted to running a Ponzi scheme worth that involved falsified reports and exaggerated projections that assured a 12 percent return on their investment annually. This confident, but false statement provided Investors with a great perception by promising very large returns which attracted rich individuals and charitable organizations; this can be attributed to an increase in market price since Madoff promised favorable results and attracted many buyers. Another factor that can contribute to an increase in the market price are big announcements like a top management change or massive corporate deals. Massive updates on issues like these normally circulate internally before being announced to the public, however obtaining this information before it goes public can be advantageous and profitable. Andrew Rankin was a star investment banker with Royal Bank of Canada Dominion and was charged with insider trading and tipping his friend Daniel Duic about several big corporate deals that were about to unfold. Utilizing this special information Duic made over four million in profit by buying and selling the stocks of these companies when the information provided directed him to do so or when it was appropriate. Contrary to positive news leading to increased market shares, another case in our text manifests the influence of bad corporate news on market prices of stocks. Glen Harper, the president of golden Rule Resources Ltd., was found guilty of insider trading when he sold 4 million dollars’ worth of shares in his company when he received news that its supposed massive gold find in Ghana was doubtful. When the news became public the price of shares fell from $13.00 per share to $0.10.
Question 2
What is the Difference between Debt and Equity Financing? Are the above examples of debt or equity issues? Equity financing involves attracting investors or partners who provide capital in exchange for ownership of the business. While debt financing involves borrowing money typically in
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