Explanation : Statement B is incorrect because loyalty can have both positive and
negative effects towards one’s behaviour. Statement C is incorrect
because processes focused solely on compliance oversimplify decision
making and that does not necessarily help the larger cause.
Explanation : Statement A is incorrect because ethical firms enjoy lower costs as they
are not subjected to investigations by regulators. Statement B is incorrect
because when investors lose trust, they expect higher returns for their
capital, which in turn increases the cost for borrowers.
Explanation : Statement B is incorrect because ethical conduct requires a professional
to go beyond what is legally required. Statement C is incorrect because a
professional should minimize the risks of all stakeholders such as the
employer, clients, family, and market participants.