A person JS is the CEO of a company RL. The company RL deals in buying life insurance policies at a discount from patients who are on their death bed and sells the same to investors. The terminally ill patients receive payments as a percentage of future death benefits. The investors buy the insurance policies at 85 percentage of the value of future benefits. The patients utilize this money for their treatment, and the investors are entitled to a guaranteed return on their investment. The company RL draws a profit from the difference between the sale and the purchase price. According to JS, most of the policies are genuine, barring a few. Insurance companies, discovering the fake policies, might cancel them and refuse to pay. To find: It is ethical for the person JS not to disclose the risk to investors about the cancellation of policies.

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Answer 1

Question

Chapter 5, Problem 1RE

Summary Introduction

Case summary: A person JS is the CEO of a company RL. The company RL deals in buying life insurance policies at a discount from patients who are on their death bed and sells the same to investors. The terminally ill patients receive payments as a percentage of future death benefits. The investors buy the insurance policies at 85 percentage of the value of future benefits. The patients utilize this money for their treatment, and the investors are entitled to a guaranteed return on their investment. The company RL draws a profit from the difference between the sale and the purchase price. According to JS, most of the policies are genuine, barring a few. Insurance companies, discovering the fake policies, might cancel them and refuse to pay.

To find:It is ethical for the person JS not to disclose the risk to investors about the cancellation of policies.

Expert Solution & Answer

Explanation of Solution

The principle of rights elucidates the fact that human beings owe some basic or fundamental rights. These basic rights include the right to live, liberty, and pursuit of happiness. If someone invests money in something, then it is unethical not to disclose the risk associated with the same to them. The investors have a right to know the risks involved in the subsequent cancellation of policies. Therefore, it is imperative for the person JS to apprise the investors that the policies might be canceled at a subsequent stage.

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James Stilton is the chief executive officer (CEO) of RightLiving, Inc., a company that buys life insurance policies at a discount from terminally ill persons and sells the policies to investors. To RightLiving pays the terminally ill patients a percentage of the future death benefit (usually 65 percent) and then sells the policies to investors for 85 percent of the value of the future benefit. The patients receive the cash to use for medical and other expenses. The investors are “guaranteed” a positive return on their investment, and RightLiving profits on the difference between the purchase and sale prices. Stilton is aware that some sick patients might obtain insurance policies through fraud (by not revealing the illness on the insurance application). Insurance companies that discover this will cancel the policy and refuse to pay.Stilton believes that most of the policies he has purchased are legitimate, but he knows that some probably are not. Using the information presented in…

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The U.S. Securities and Exchange Commission (SEC) released its final rule to implement a code of ethics under SOX Title 404. The stock exchanges have proposed that each company listed on the exchanges publish its code of ethics. Discuss how disclosures of a code of ethics by senior management could have a positive effect on public confidence and influence investors' behavior. Discuss the consequences of not establishing a code of ethics. Support your position. Evaluate the importance of senior management in setting the tone for the application of the company's code of ethics and promoting positive employee behavior, improved decision making, or the willingness to report unethical behavior of coworkers. Recommend at least two policies that might encourage employees to report unethical behavior.

Answer 2

Question

Chapter 5, Problem 1RE

Summary Introduction

Case summary: A person JS is the CEO of a company RL. The company RL deals in buying life insurance policies at a discount from patients who are on their death bed and sells the same to investors. The terminally ill patients receive payments as a percentage of future death benefits. The investors buy the insurance policies at 85 percentage of the value of future benefits. The patients utilize this money for their treatment, and the investors are entitled to a guaranteed return on their investment. The company RL draws a profit from the difference between the sale and the purchase price. According to JS, most of the policies are genuine, barring a few. Insurance companies, discovering the fake policies, might cancel them and refuse to pay.

To find:It is ethical for the person JS not to disclose the risk to investors about the cancellation of policies.

Expert Solution & Answer

Explanation of Solution

The principle of rights elucidates the fact that human beings owe some basic or fundamental rights. These basic rights include the right to live, liberty, and pursuit of happiness. If someone invests money in something, then it is unethical not to disclose the risk associated with the same to them. The investors have a right to know the risks involved in the subsequent cancellation of policies. Therefore, it is imperative for the person JS to apprise the investors that the policies might be canceled at a subsequent stage.

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Answer 3

Question

Chapter 5, Problem 1RE

Summary Introduction

Case summary: A person JS is the CEO of a company RL. The company RL deals in buying life insurance policies at a discount from patients who are on their death bed and sells the same to investors. The terminally ill patients receive payments as a percentage of future death benefits. The investors buy the insurance policies at 85 percentage of the value of future benefits. The patients utilize this money for their treatment, and the investors are entitled to a guaranteed return on their investment. The company RL draws a profit from the difference between the sale and the purchase price. According to JS, most of the policies are genuine, barring a few. Insurance companies, discovering the fake policies, might cancel them and refuse to pay.

To find:It is ethical for the person JS not to disclose the risk to investors about the cancellation of policies.

Expert Solution & Answer

Explanation of Solution

The principle of rights elucidates the fact that human beings owe some basic or fundamental rights. These basic rights include the right to live, liberty, and pursuit of happiness. If someone invests money in something, then it is unethical not to disclose the risk associated with the same to them. The investors have a right to know the risks involved in the subsequent cancellation of policies. Therefore, it is imperative for the person JS to apprise the investors that the policies might be canceled at a subsequent stage.

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Answer 4

Question

Chapter 5, Problem 1RE

Summary Introduction

Case summary: A person JS is the CEO of a company RL. The company RL deals in buying life insurance policies at a discount from patients who are on their death bed and sells the same to investors. The terminally ill patients receive payments as a percentage of future death benefits. The investors buy the insurance policies at 85 percentage of the value of future benefits. The patients utilize this money for their treatment, and the investors are entitled to a guaranteed return on their investment. The company RL draws a profit from the difference between the sale and the purchase price. According to JS, most of the policies are genuine, barring a few. Insurance companies, discovering the fake policies, might cancel them and refuse to pay.

To find:It is ethical for the person JS not to disclose the risk to investors about the cancellation of policies.

Expert Solution & Answer

Explanation of Solution

The principle of rights elucidates the fact that human beings owe some basic or fundamental rights. These basic rights include the right to live, liberty, and pursuit of happiness. If someone invests money in something, then it is unethical not to disclose the risk associated with the same to them. The investors have a right to know the risks involved in the subsequent cancellation of policies. Therefore, it is imperative for the person JS to apprise the investors that the policies might be canceled at a subsequent stage.

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Answer 5

Chapter 5, Problem 1RE

Summary Introduction

Case summary: A person JS is the CEO of a company RL. The company RL deals in buying life insurance policies at a discount from patients who are on their death bed and sells the same to investors. The terminally ill patients receive payments as a percentage of future death benefits. The investors buy the insurance policies at 85 percentage of the value of future benefits. The patients utilize this money for their treatment, and the investors are entitled to a guaranteed return on their investment. The company RL draws a profit from the difference between the sale and the purchase price. According to JS, most of the policies are genuine, barring a few. Insurance companies, discovering the fake policies, might cancel them and refuse to pay.

To find:It is ethical for the person JS not to disclose the risk to investors about the cancellation of policies.

Expert Solution & Answer

Explanation of Solution

The principle of rights elucidates the fact that human beings owe some basic or fundamental rights. These basic rights include the right to live, liberty, and pursuit of happiness. If someone invests money in something, then it is unethical not to disclose the risk associated with the same to them. The investors have a right to know the risks involved in the subsequent cancellation of policies. Therefore, it is imperative for the person JS to apprise the investors that the policies might be canceled at a subsequent stage.

Answer 6

Chapter 5, Problem 1RE

Summary Introduction

Case summary: A person JS is the CEO of a company RL. The company RL deals in buying life insurance policies at a discount from patients who are on their death bed and sells the same to investors. The terminally ill patients receive payments as a percentage of future death benefits. The investors buy the insurance policies at 85 percentage of the value of future benefits. The patients utilize this money for their treatment, and the investors are entitled to a guaranteed return on their investment. The company RL draws a profit from the difference between the sale and the purchase price. According to JS, most of the policies are genuine, barring a few. Insurance companies, discovering the fake policies, might cancel them and refuse to pay.

To find:It is ethical for the person JS not to disclose the risk to investors about the cancellation of policies.

Expert Solution & Answer

Explanation of Solution

The principle of rights elucidates the fact that human beings owe some basic or fundamental rights. These basic rights include the right to live, liberty, and pursuit of happiness. If someone invests money in something, then it is unethical not to disclose the risk associated with the same to them. The investors have a right to know the risks involved in the subsequent cancellation of policies. Therefore, it is imperative for the person JS to apprise the investors that the policies might be canceled at a subsequent stage.

Answer 7

Chapter 5, Problem 1RE

Summary Introduction

Case summary: A person JS is the CEO of a company RL. The company RL deals in buying life insurance policies at a discount from patients who are on their death bed and sells the same to investors. The terminally ill patients receive payments as a percentage of future death benefits. The investors buy the insurance policies at 85 percentage of the value of future benefits. The patients utilize this money for their treatment, and the investors are entitled to a guaranteed return on their investment. The company RL draws a profit from the difference between the sale and the purchase price. According to JS, most of the policies are genuine, barring a few. Insurance companies, discovering the fake policies, might cancel them and refuse to pay.

To find:It is ethical for the person JS not to disclose the risk to investors about the cancellation of policies.

Answer 8

Expert Solution & Answer

Explanation of Solution

The principle of rights elucidates the fact that human beings owe some basic or fundamental rights. These basic rights include the right to live, liberty, and pursuit of happiness. If someone invests money in something, then it is unethical not to disclose the risk associated with the same to them. The investors have a right to know the risks involved in the subsequent cancellation of policies. Therefore, it is imperative for the person JS to apprise the investors that the policies might be canceled at a subsequent stage.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Ch. 5 - Prob. 1RE Ch. 5 - Prob. 2RE Ch. 5 - Prob. 3RE Ch. 5 - Prob. 4RE Ch. 5 - Prob. 1IS Ch. 5 - Prob. 2IS Ch. 5 - Prob. 1BS Ch. 5 - Prob. 2BCP Ch. 5 - Prob. 3BCP Ch. 5 - Prob. 4BCP

Explanation of Solution

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Chapter 5 Solutions