1) A flurry of corporate scandals (e.g. Enron, Health South, WorldCom, Parmalat, etc.) led to passage of Sarbanes-Oxley Act (SOX) in 2002. Yet, in wake of financial crisis, penalties (and certainly criminal prosecutions) of executives at financial institutions which failed, those that sponsored asset-backed securities which defaulted, etc. have been few and far between. And number of Ponzi-kind schemes as run be Bernie Madoff and others appears to still be very high, even with criminal penalties which have been assessed. Describe what steps might be taken to make sure that investors are getting accurate and whole information to be able to make intelligent investment decisions.

2) Maxwell Inc.'s stock has a= 50% chance of producing a= 25% return, a 30% chance of producing= 10% return, and 20% chance of producing= -28% return. Determine the firm's expected rate of return?

i) 9.41%
ii) 9.65%
iii) 9.90%
iv) 0.15%