1. What is legal is not necessarily ethical and what is ethical is not necessarily legal.
2. The agency problem in corporate governance is about how to get managers' interests well aligned with the shareholders' interests.
3. According to utilitarianism, _____.
- results, not rules, are emphasized
- ethical action arises from doing one's duty
- duties are defined by rational thought
- emphasis is on what is the fair way to distribute goods among a group of people
- people give up certain rights to government in exchange for security
4. Which of the following is true according to Aristotle and the Virtue theory?
- Aristotle believed that as all activity was aimed at some goal or perceived good, no ranking was required among those goals or goods.
- Aristotle rejected wealth, pleasure, and fame as the distinguishing feature of humans as opposed to other species.
- Happiness is living according to passive use of reason.
- The emphasis on virtue theory has gradually been reducing while more attention is being given to the utilitarian and deontological approaches to ethics.
- Happiness cannot be associated with reason.
5. The manager's fiduciary duty refers to _____.
- the duty of managers to maximize returns to employees
- the legally prescribed duties which make their employment possible
- the moral duty managers have to act as responsible agents to the owners
- managers resisting hostile takeover bids
- managers managing by number
6. _____ helps companies embrace the idea that profit and prosperity must go hand in hand with social justice and environmental stewardship.
- Social contract
- Stakeholder theory
- Conscious capitalism
- Virtue ethics
- Deontology
7. It is possible to become someone's partner without intending to or even realizing that partnership has been created.
8. Partnership is limited to a direct association between human beings.
9. A _____ is the association of two or more people carrying on a business as co-owners for profit.
- limited liability company
- trust
- partnership
- proprietorship
- agency relationship
10. The concept of a business firm as a legal person, with existence and accountability separate from its owners stems from _____.
- entity theory
- aggregate theory
- concession theory
- conduit theory
- appropriation theory
11. The Uniform Partnership Act and the Revised Uniform Partnership Act do not dictate what relations among partners must be.
12. The Revised Uniform Partnership Act (RUPA), generally, requires the judgment creditor to exhaust the partnership's assets before going after the separate assets of a partner.
13. For tortuous acts, the partners are said to be jointly and severally liable under both Uniform Partnership Act (UPA) and Revised Uniform Partnership Act (RUPA), and the plaintiff may separately sue one or more partners.
14. _____ is the highest duty of good faith and trust, imposed on partners as to each other and the firm.
- Embezzlement duty
- Larceny duty
- Escrow duty
- Escheat duty
- Fiduciary duty
15. A court order that directs a partnership to pay a partner's judgment creditor the distribution that the partner would normally receive is called _____.
- doctrine of estoppel
- order of relief
- proof of claim
- performance bond
- charging order
16. Sub-S corporations, limited liability partnerships, and limited liability limited partnerships are all entities.
17. The partnership law imposed personal liability on the partners because people tend to be more careful when they are personally liable for their own mistakes and bad judgment.
18. The original source of limited partnership law is the _____ that was drafted in 1916.
- Uniform Limited Partnership Act (ULPA)
- Revised Uniform Limited Partnership Act
- National Conference of Commissioners on Uniform Laws
- Companies Act
- Limited Liability Partnership Act
19. It is required that the limited liability company (LLC) members file a _____ with the secretary of the state during its creation.
- certificate of stare decisis
- certificate of organization
- certificate of ultra vires
- certificate of derivative action
- certificate of parens patriae
20. When the limited liability company (LLC) is manager managed, _____.
- all members have actual and apparent authority to bind the LLC to contracts on its behalf
- all member votes have equal weights
- non-manager members also have duty of care and fiduciary duty
- only managers have the legal authority to bind the firm
- firm decisions that are extraordinary can be taken only by its manager members
21. The corporate veil creates a separate, legally recognized corporate entity and shields the people behind the corporation from personal liability.
22. Failure to follow corporate formalities may subject stockholders to personal liability.
23. Choosing the particular venue in which to incorporate is the first critical decision to be made after deciding to incorporate.
24. Public corporations are also known as _____ corporations.
- closely held
- S
- nonprofit
- professional
- municipal
25. An officer can be held strictly liable for his corporation's violation of the regulations, regardless of the fact that he or she had no knowledge about it.
26. Shareholders are permitted to adopt, amend, and repeal the corporation's bylaws.
27. The Sarbanes-Oxley Act of 2002 states that a corporate officer or a director cannot be fired without a particular clause.
28. A majority of the members of the board constitutes a quorum, unless the articles of incorporation specify a larger number.
29. Who among the following have little decision making authority in a corporation?
- A company's director
- A company's employee
- A company's manager
- A company's officer
- A company's stockholder
30. The _____ doctrine is a doctrine holding that certain legal consequences attach to an attempt by a corporation to carry out acts that are outside its lawful powers.
- promissory estoppel
- delectus respondeat
- family purpose
- ultra vires
- inter vivos
31. Drafters of the Sherman Act based the act on a common-law policy against monopolies and other infringements on competition.
32. The Clayton Act was enacted in 1914 to plug the loopholes in the Sherman Act.
33. Like the Sherman Act, the Federal Trade Commission Act is a civil statute, involving no criminal penalties.
34. Possessing a monopoly is not per se unlawful.
35. The Sherman Antitrust Act of 1890 was formed to:
- forbid combinations in restraint of trade and monopolizing
- forbid employers from interacting with workers in the private sector who create labor unions
- limit the formation of yellow-dog contracts
- set enhanced standards for all U.S. public company boards, management and public accounting firms.
- limit the formation of runaway shop agreements
36. _____ is a remedy used to break up a firm into smaller, independent units, where the firm has exercised its monopoly power.
- Amalgamation
- Divestiture
- Arson
- Money laundering
- Abatement
37. The first principle of Federal Trade Commission action is that it gauges deceptive acts and practices as interpreted by the general public, not by the more sophisticated.
38. If a fact not disclosed has a bearing on a consumer's decision whether to purchase the product, its omission might be tantamount to deception.
39. The Federal Trade Commission can order a company to remove or modify a deceptive trade name.
40. In the _____ Act of 1912, Congress for the first time empowered a federal agency to investigate and deter acts of unfair competition.
- Federal Protective Service
- Federal Emergency Management
- Federal Trade Commission
- Federal Law Enforcement Training
- Federal Housing Administration