Activity 8

Direction: Explain each questions, before you begin writing, read the passage
carefully and plan what you will say. Your essay should be as well organized and
as carefully written as you can make it. Read carefully, reflect on and record
your responses to the following questions.

1. What are the types of institutional investors?

An institutional investor buys, sells, and manages stocks, bonds, and other
investment securities on behalf of its clients, customers, members, or
shareholders. Broadly speaking, there are six types of institutional
investors: endowment funds, commercial banks, mutual funds, hedge funds,
pension funds, and insurance companies. Institutional investors face fewer
protective regulations compared to average investors because it is assumed the
institutional crowd is more knowledgeable and better able to protect themselves.
Institutional investors have the resources and specialized knowledge for
extensively researching a variety of investment opportunities not open to retail
investors. Because institutions are moving the biggest positions and are the largest
force behind supply and demand in securities markets, they perform a high
percentage of transactions on major exchanges and greatly influence the prices of
securities.

2. What does audit committees do?

The major function of an organization's audit committee is to oversee the financial

reporting process, the audit process, the internal control system of the
organization, and legal and regulatory compliance. To comprehend the potential
impact on financial statements, the audit committee might anticipate reviewing
important accounting and reporting concerns as well as current professional and
regulatory declarations. To determine if reports are thorough and reliable, it is vital
to comprehend how management creates internal interim financial information. The
committee discusses the audit findings with management and external auditors,
taking into account any information that must be shared with the committee in
accordance with widely recognized auditing standards. The committee is
responsible for overseeing controls over financial reporting, information technology
security, and operational issues.