This is for my business ethics course. Please answer discussion questions 1-7 (l

Question

This is for my business ethics course. Please answer discussion questions 1-7 (last page)

Solving Ethical Dilemmas and Personal Introspection Case 2.11 What Was Up with Wall Street? The Goldman Standard and Shades f Gr Humble Roots Goldman Sachs was founded in 1869 with the humble purpose of being both an origina tor and a clearinghouse for commercial paper. Marcus Goldman, a German immigrant founded the company along with his son-in-law, Samuel Sachs. The company's strategy was to provide loans for small businesses and then create a market for the loans through the sale of commercial paper. But the stodgy negotiable instruments market proved insufficient for attracting new talent, so the firm began a gradual drift from its founders influence and its basic roots in tangible one-on-one business loans. In the late 1920s, Goldman undertook an investment strategy that would contribute to the 1929 market crash. Goldman launched the investment trust, a vehicle by which anyone could invest small or large amounts of money and hold shares in the trust, which then purchased a portfolio of stocks. The trust income then came from the returns on the stocks in the portfolio. Investment Strategy The 1920s and Layering Even in its initial foray into the layered investment strategies that would still be in play a century later, Goldman was using its own customers to make money. The layering stra egy, formulated in the late 1920s, works like this: Goldman creates an investment com pany and buys 90 percent of the shares in that company with its own money. Because the shares have sold so well, the public (not realizing that Goldman itself had purcha the shares and driven the price up) wants a piece of the company. So, the shares t Goldman initially bought for, say, s100, it is able to turn around and sell to the publie for $110. But Goldman would continue to buy shares on the secondary market, and th price would climb to $120 and then $150 and so on. With the money Goldman m this initial corporation, it would create a new corporation and use the same strateg) ade on to drive up the price., moving on to another new corporation with more demand and h share prices. However, all the layers in the chain are completely dependent upon the has market continuing to grow and the solvency of Goldman because as one w described it: Goldman invests $1.00 and borrows s9 (through the sales to the p bof- Goldman then takes the S1 investment and the $9 borrowed (for a total of SI0) rows $90 with an investment of only $10 and from there moves onto S100 and Diagrammatically, the leveraged deals are shown next page. rage extraordinaire was the theme that began in the late 1920s with this and continued through to the subprime mortgage secondary instrument resulted in the market crash of 2008. In the 1920s, the public was investing folios. Goldman nearly collapsed when the stock market crashed in 1929. that in stock port Matt Taibi. The Great American Bubble Machine. Roling Stone, July 2. 2009. p 54

Explanation / Answer

QUESTION: GO BACK THROUGH THE CASE AND MAKE A LIST OF EACH ACTION OR PRACTICE THAT COULD BE CALLED A GRAY AREA.

The gray area is the area which presents a scope for breach of the code of conduct and ethical practices. Some of these action and practices for the given case are as follows:

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