Question

Lou Hoskins and Shirley Crothers are organizing Red Lodge Metals Unlimited Inc. to undertake a high-risk gold-mining venture in Canada. Lou and Shirley tentatively plan to request authorization for 400,000,000 shares of common stock to be sold to the general public. Lou and Shirley have decided to establish par of $0.03 per share in order to appeal to a wide variety of potential investors. Lou and Shirley feel that investors would be more willing to invest in the company if they received a large quantity of shares for what might appear to be a "bargain" price. Discuss whether Lou and Shirley are behaving in a professional manner.

Answer 1

ANSWER

As per the given question,

STEP-1

ETHICS refers to the moral principles. There are various types of ethics like business ethics, culture ethics, work ethics. Briefly, it can be said that ethics is a process of doing any work in a systemic and effective manner as per the rules or procedures.

STEP - 2

The persons L and S both are behaving in a manner that is professionally ethical. this happens as long as the whole information is given to the potential investors as per the federal regulations for the sale of securities to the public.

STEP-3

The marketplace will determine the fair value if such information is providing regarding the company's stock.

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