Financial assets include stocks and bonds. These are fairly simple securities that canoften be valued using quoted market prices. However, there are more complex financialinstruments that do not have quoted market prices. These complex securities must still bevalued on the balance sheet at fair value. Generally accepted accounting principles requirethat the reporting entity use assumptions in valuing investments when market prices or critical valuationinputs are unobservable.

1. What are the ethical considerations in making subjective valuations of these complex financialinstruments?