Financial assets include stocks and bonds. These are fairly simple securities that can

often be valued using quoted market prices. However, Wall Street has created many

complex and exotic securities that do not have quoted market prices. These securities,

such as structured investment vehicles (SIVs), must still be valued on the balance sheet

at fair value. Generally accepted accounting principles require that the reporting entity

use assumptions in valuing investments when market prices or critical valuation inputs

are unobservable.

What are the ethical considerations in making subjective valuations of complex and

exotic investments?