final Flashcards
1
Q
Securities generally do not include any documents evidencing corporate
ownership or debt.
A
False
2
Q
The Securities and Exchange Commission (SEC) requires companies to le
certain information electronically so that it can be posted on the SEC’s
EDGAR database.
A
True
3
Q
All securities transactions must be registered with the Securities and
Exchange Commission—there are no exemptions.
A
False
4
Q
Once a registration statement has been led, a waiting period begins
while the Securities and Exchange Commission reviews the statement.
A
True
5
Q
A well-known seasoned issuer cannot le a registration statement until
after it announces a new oering.
A
False
6
Q
Securities oerings in unlimited amounts can be exempt from the
registration requirements in certain circumstances.
A
True
7
Q
Most securities can be resold without registration.
A
True
8
Q
Liability can be imposed on those who are negligent in not discovering
fraud in connection with a registration statement or prospectus.
A
True
9
Q
The Securities Exchange Act of 1934 applies to companies that have
assets in excess of $5 million and ve hundred or more employees.
A
False
10
Q
Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 apply just to corporate “insiders.”
A
False
11
Q
The key to liability under Section 10(b) of the Securities Exchange Act of
1934 and SEC Rule 10b-5 is whether information omitted or
misrepresented in connection with the purchase or sale of a security is
material.
A
True
12
Q
Corporate “outsiders” may not be held liable for insider trading under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5.
A
False
13
Q
In the context of Section 16(b) of the Securities Exchange Act of 1934,
insiders include ocers, directors, and large stockholders of Section 12
corporations.
A
True
14
Q
For civil sanctions to be imposed under Section 10(b) of the Securities
Exchange Act of 1934 and SEC Rule 10b-5, the violator must not have had
an intent to defraud or knowledge of his or her misconduct.
A
False
15
Q
The Securities and Exchange Commission does not regulate the content of
proxy statements.
A
False
16
Q
Private parties can sue violators of Section 10(b) of the Securities
Exchange Act of 1934 and SEC Rule 10b-5 for rescission of a contract to
buy securities.
A
True
17
Q
Every state has it own corporate securities laws that regulate the oer
and sale of securities within its borders.
A
True
18
Q
Corporate accountability can be increased by imposing strict disclosure
requirements and harsh penalties for securities laws.
A
True
19
Q
Under the Sarbanes-Oxley Act of 2002, chief nancial ocers must certify
the accuracy of information in corporate nancial statements and reports
that are led with the Securities and Exchange Commission.
A
True
20
Q
The Securities and Exchange Commission does not enforce the antifraud
provisions of the securities laws in the online environment.
A
False
21
Q
Cotton Products Corporation is a public company whose shares are
traded in the public securities markets. With respect to nancial and other
signicant information concerning its securities, the Securities Act of 1933
A
c. requires disclosure.
22
Q
Guitar Factory Corporation les a registration statement and delivers a
prospectus to the appropriate parties. These items are intended to enable
the evaluation of certain nancial risks by
A
a. unsophisticated investors.
23
Q
Global Trade Corporation is a public company that is poised to issue
securities that do not qualify for an exemption from registration. This
means that Global Trade must
A
a. file a registration statement with the SEC.
24
Q
Household Products Corporation wants to make an oering of securities
to the pub lic. This oering is not exempt from registration under the Se -
curities Act of 1933. Before Household Products sells its securities, it must
provide in vestors with
A
a. a prospectus
25
Riverwalk Restaurants Corporation is a noninvestment company that
wants to is sue stock of $3 million in a twelve-month period. Riverwalk,
with less than $20 mil lion in annual sales, qualies as a small business
issuer. Before Riverwalk sells the stock, it must provide investors with
. an offering circular.
26
Fleet Delivery Corporation is a public company with a market
capitalization of less than $75 million. Fleet is poised to issue securities in
a transaction that, under the Securities Act of 1933, is “exempt.” This
enables Fleet to
. reduce the compliance costs by not requiring an auditor report.
27
As part of a stock oering for Designer Studio Corporation, the rm’s
accountant Evelyn intention ally misrepresents material facts in the pro -
spectus. Flores buys the stock unaware of the misrepresentation and suf -
fers a loss. Evelyn may be subject to
a. a fine, imprisonment, and damages.
28
Space Trips Inc. les a registration statement with the SEC before making
an oering to the general public. The registration contains false,
immaterial statements of which the investors are unaware. Space Trips is
charged with violating the Securities Act of 1933. Space Trips’s best
defense is
the untrue statements were not material.
29
Fresh Fruit Company has assets of less than $10 million and fewer than
fty shareholders. Gourmand Pastries, Inc., has assets of more than $50
mil lion and more than ve hundred shareholders. The Securities
Exchange Act of 1934 applies to
Gourmand Pastries only.
30
Bonds & Stocks Corporation, and its ocers, directors, and sharehold ers,
buy and sell securities. SEC Rule 10b-5 applies to the purchase or sale of
any security.
31
To raise capital to form Business Apps Corporation with Cris, Dona sells
bonds and stock in other companies, and plans to register an initial public
o er ing under the Securities Act of 1933. SEC Rule l0b-5 covers
just about any form of securities
32
Dhani, an accountant for Eureka! Inc. learns of undisclosed com pany plan -
s to market a new laptop. Dhani buys 1,000 shares of Eureka stock. He re -
veals the company plans to Fay, who tells Geo. Both Fay and Geo buy
100 shares. Geo knows that Fay got her informa tion from Dhani. When
Eureka! publicly an nounces its new laptop, Dhani, Fay, and Geo sell their
stock for a prot. Under the Securities Ex change Act of 1934, Fay is most
likely
liable for insider trading.
33
Rico does not work for Street Bikes Company, but wrong fully obtains
inside information concerning the rm. Based on the in forma tion, Rico
buys and sells Street Bikes stock for personal gain. The Securities and
Exchange Commission prose cutes Rico, arguing that he is liable because
he stole in formation right fully belonging to another. This argument is
the misappropriation theory.
34
OnSpec, Inc., and its ocers, directors, and share holders, buy and sell
securities. Section 16(b) of the Securities Exchange Act of 1934 covers
purchases and sales of securities involving
. short-swing profits
35
Grain Mills Corporation is required to register its securities under Section
12 of the Securities Exchange Act of 1934. Section 14(a) of the act
regulates
the solicitation of proxies from Grain Mills’s shareholders.
36
Cattle Ranch Company oers its stock for sale only in a single state. The
law in Cattle Ranch’s state is like the law in most states. Cattle Ranch’s
oer is sub ject to state securities statutes that include
antifraud and disclosure provisions.
37
Boats & Yachts Corporation is a public company, which California
regulates and in which Dorian invests. The Sarbanes-Oxley Act of 2002
introduced direct federal corporate governance requirements to
public companies.
38
HVAC Heating & Air Conditioning, Inc., is a public company whose shares
are traded in the public securities markets. Under the Sarbanes-Oxley Act
of 2002, to ensure that HVAC’s nancial results are accurate and timely,
the rm’s senior ocers must set up and maintain
internal “disclosure controls and procedures.”
39
Rollo is the chief executive ocer of Specialty Magazines, Inc., which is
required to le certain nancial reports with the Securities and Exchange
Commission (SEC). Under the Sarbanes-Oxley Act of 2002, Rollo must
certify that the reports are complete and accurate.
40
The purpose of antitrust law is to reduce competition.
False
41
Any activity that substantially aects interstate commerce falls outside the
scope of antitrust laws.
False
42
Market power is the ability of a rm to enter a given market.
False
43
A price-xing agreement that is reasonable does not violate antitrust law
False
44
A horizontal restraint is any agreement that in some way restrains
competition between rival rms competing in the same market.
True
45
Any agreement that restricts output among competitors is a per se
violation of Section 1 of the Sherman Act.
True
46
A concentrated industry is one in which either a single rm or a small
number of rms carry out the separate functions of the chain of
production.
False
47
A territorial or customer restriction is currently considered a per se
violation of antitrust law.
False
48
The possession of monopoly power is the only element needed to
establish the oense of monopolization.
False
49
A rm may be a monopolist even though it is not the sole seller in a
market.
True
50
The relevant product market includes only products that, although
produced by dierent rms, have identical attributes.
False
51
Attempted monopolization is a violation of antitrust law
True`
52
Predatory pricing is a legitimate marketing practice, not a form of
anticompetitive conduct
False
53
A seller is prohibited from charging dierent prices to competing buyers
for identical goods or services.
True
54
A seller is prohibited from making an exclusive-dealing contract if the
eect is to tend to create a monopoly.
True
55
An exclusive-dealing contract is an agreement in which a seller agrees not
to sell to a buyer’s competitors.
False
56
A horizontal merger occurs when a company at one stage of production
acquires a company at a higher or lower stage of production.
False
57
Only the U.S. Department of Justice can prosecute violations of all of the
antitrust laws.
False
58
A joint eort by businesspersons to obtain legislative action can be
exempt from the antitrust laws.
True
59
U.S. antitrust laws may be applied to protect foreign consumers and
competitors from violations committed by U.S. business rms
True
60
Congress enacts a statute to outlaw a specic type of anticompetitive
business agreement. Like other laws that regulate economic competition,
this law is referred to as
a. an antitrust law
61
Discount Retail Corporation may be engaging in conduct that vio lates the
Sherman Act. To bring an action against the rm requires that its conduct
have a sig nicant impact on
a. interstate commerce.
62
Soft Drink Corporation is charged with violating the Sherman Act through
conduct subject to the rule of reason. When applying the rule of reason in
this situation, a court will not consider
a. the eect of the agreement on international trade.
63
Natural Gas, Inc., and Olio Energy Company rene and sell natural gas. To
limit the supply of natural gas on the market and thereby raise prices,
Natural Gas and Olio Energy agree to buy “excess” supplies from dealers
and “dispose” of it. The agreement between Natural Gas and Olio Energy
is
. a horizontal restraint.
64
Natural Gas, Inc., and Olio Energy Company rene and sell natural gas. To
limit the supply of natural gas on the market and thereby raise prices,
Natural Gas and Olio Energy agree to buy “excess” supplies from dealers
and “dispose” of it. The Natural Gas and Olio Energy deal is
a per se violation of antitrust law.
65
Fine Food Company, Gourmet Cheeses, Inc., and Healthy Eats, Inc. agree
to exchange information and share advertising. This trade association is
a. subject to analysis under the rule of reason.
66
The Association of Organic Food Producers, which does not include all
organic farmers and ranchers, refuses to deal with any parties who do not
carry the products of its members. This group boycott is
a per se violation of antitrust law.
67
Oce Warehouse Inc. and Paperclips Inc. are the chief competitors in
their market. They agree that Oce Warehouse will operate only east of
the Mississippi River and Paperclips will operate only west of the
waterway. Under antitrust law, this is most likely
a per se violation.
68
Frictionless Lubricant Corporation and Grease, Inc., are the principal sup -
pliers of their product in their market. They agree that Frictionless will sell
exclusively to retailers and Grease will sell exclusively to wholesalers.
Under antitrust law, this is most likely
a per se violation.
69
Bill’s Barber Supplies, Inc., is the major distributor of barber supplies in
the state of Colorado. Bill’s closest competitor is Dona’s Beauty Products
Company, another Colorado rm. They agree that Bill’s will distribute its
products in western Colorado and Dona’s will distribute its products in the
eastern part of the state. This is
a market division
70
Smart Tablets, Inc., requires all distribu tors of its products to sell them at
a specied minimum price. This is a violation of antitrust law
if the anticompetitive effects outweigh the competitive benefits.
71
Golf & Tennis LLC makes and sells golf clubs, tennis racquets, and related
sporting goods. By selling its products at prices substantially below the
normal cost of production, Golf & Tennis hopes to drive its competitors
from the market. This is
predatory pricing.
72
A suit is led against DrillBits Corporation, alleging that the rm commit -
ted the oense of monopolization. To determine whether DrillBits has
monopoly power requires looking at
the relevant market
73
Glassworx Corporation has exclusive control over the mar ket for its
products. Under antitrust law, this is
a violation if it acquired this power through “anticompetitive means.”
74
Speedboat Corporation refuses to sell its products to Water World, Inc., a
recreational water products dealership. This is a violation of antitrust laws
if it
has an anticompetitive effect on a particular market.
75
To drive its competitors out of a certain geographic segment of its market,
Fryin’ Potatoes, Inc., sets the prices of its products below cost for the
buyers in that area. This is
price discrimination.
76
Disc & Shoe Brakes Corporation, a brake manufacturer, sells its products
to Eastside Motors, a retailer, at lower prices than it charges Fast Brake, a
com peti tive re tailer. This price discrimination is legal
unless its effect is to substantially lessen competition.
77
City Manufacturing Corporation conditions shipments of its products to
Exurb Stores, Inc., on Exurb’s agreement not to buy products from
Regional Works Company, City’s competitor. This is
an exclusive-dealing contract.
78
Mango Corporation believes that Melon Corporation engages in anticom -
peti tive behavior in an attempt to drive Mango and its other competitors
out of the market. Antitrust laws can be enforced against Melon by
Mango and Melon’s other competitors.
79
Big American Oil Company joins with a foreign cartel to control the price
of oil. If the cartel has a substantial eect on U.S. commerce, a suit for
violation of U.S. antitrust laws can be brought against
all of the choices.
80
An injured party may sue a business polluter in tort under the negligence
and strict liability theories.
True
81
A public authority, such as a state’s attorney general, can sue to stop a
“public” nuisance.
True
82
Businesses that engage in ultrahazardous activities are not liable for any
injuries the activities cause.
False
83
Only the federal government may restrict emissions from motor vehicles.
False
84
An environmental impact statement must analyze the impact on any
aected business of proposed environmental controls.
False
85
The primary responsibility for implementing air-pollution standards
established under the Clean Air Act rests with state and local
governments.
False
86
The Environmental Protection Agency has not concluded that greenhouse
gases, including carbon dioxide emissions, constitute a public danger.
False
87
There is one set of ambient standards—maximum permissible levels of
certain pollutants—and the Environmental Protection Agency formulates
plans to achieve them
False
88
Those who knowingly violate the Clean Air Act may be subject to criminal
liability.
True
89
National Pollutant Discharge Elimination System permits can be issued
even if a discharge will violate water-quality standards.
False
90
The National Pollutant Discharge Elimination System focuses on industrial
wastewater and storm water discharges.
True
91
Water-quality standards are set by the Environmental Protection Agency
False
92
```
National euent (pollution) standards are set by the Environmental
Protection Agency for each industry.
```
True
93
The Clean Water Act permits the lling or dredging of wetlands without a
permit.
False
94
Under the Clean Water Act, criminal penalties apply whether a violation
was intentional or unintentional.
False
95
Public water systems operators must come as close as possible to
meeting the Environmental Protection Agency’s standards by using any
available technology that is economically and technologically feasible.
False
96
Any oil facility that discharges oil into navigable waters or onto an
adjoining shore may be liable for cleanup costs, as well as damages.
True
97
It is a violation of federal law to sell a pesticide or herbicide that has a
chemical strength dierent from the concentration declared on the label.
True
98
When a release of hazardous chemicals from a site occurs, potentially
responsible parties can avoid liability through transfer of ownership.
False
99
There are no defenses to liability under the Comprehensive
| Environmental Response, Compensation, and Liability Act.
False
100
Ultrahazard Removal & Disposal Corporation transports radioactive
materials. Vincent, an Ultrahazard employee, is diagnosed with radiation
sickness after exposure to the materials. Vincent’s suit
against Ultrahazard to recover for the injury is known as
a toxic tort.
101
Plywood & Particleboard Mill, Inc., does not use proper lters on its
stacks, which consequently pollute the air. Quinn, a Plywood
& Particleboard employee, suers respiratory illness. To succeed in a suit
against the company on the ground of negligence, Quinn must show that
he suers from
Plywood & Particleboard’s failure to use reasonable care to avert harm to
Quinn
102
Nashville, Tennessee, passes an ordinance to regulate waste disposal. The
disposal of waste may also be regulated by
a. all other levels of government.
103
Clean n’ Green, Inc., operates a chain of car washes throughout the United
States. The government entity that is most likely to be involved in
regulating the chain’s environmental impact is
federal and state regulatory agencies.
104
Energy Market Corporation wants to build a wind power plant on pri vate
land, for which a federal permit is required. For this action, an environ -
mental impact statement is
required.
105
Ski Resorts, Inc., wants to add a new run to its facility in a national park on
federal land. For this action, an environmental impact statement is
. required.
106
The National Park Service hires Outdoor Play, Inc., to replace outdated
playground equipment in a handful of national parks. For this action, an
environmental impact state ment is most likely
unnecessary because the action is not “major.”
107
Loaf & Biscuit Company operates a commercial dough making and
packaging plant—a “major source”—that emits hazardous air pollutants
for which the Environmental Protection Agency has set maximum levels of
emission. The plant does not use any equipment to reduce its emissions.
Under the Clean Air Act, this is most likely
a violation.
108
The operations of Commercial Concrete, Inc., are major sources of air
pollu tion. These operations must use
the maximum achievable control technology.
109
Industrial Solvents, Inc., averages $15,000 prot per day before deciding
to ignore air pollution standards, after which the average is $30,000.
Industrial Solvents is subject to a ne of
$30,000 per day.
110
Fried Food, Inc., operates a commercial frying plant, discharging pol lut -
ants into the air. Greg reports the violations to the Environmental
Protection Agency. Greg
d. may be paid up to $10,000
111
Condos & Course Development, Inc., lls a wetlands area that it owns
without a permit from the U.S. Army Corps of Engineers. Condos
& Course Development plan to build a golf course and residences on the
site. Under the Clean Water Act, this is most likely.
a. a violation
112
Energy Resources, Inc., operates an oil renery near Forest River, which ows
into Grove Lake. Discharging oil from the renery into the river can result
in
penalties and damages.
113
Grease & Lubricants Inc. makes its products without required pollution
control technology, causing a discharge of oily waste into the nearby Holly
Lake. This activity can re sult in
a criminal fine, imprisonment, an injunction, or damages.
114
County Water & Sewer operates a public water supply system. County
Water must send to every household it supplies with water an annual
statement describing.
the source of the water, and any contaminants and health concerns.`
115
Pest Eradication, Inc., makes a pesticide with a one-in-a-million risk to
people of developing cancer from exposure. This substance must be
. registered before it is sold.
116
HazMat Waste Corporation operates a hazardous waste storage facility.
Concerned that there may be a release of chemicals from the site, HazMat
sells the property to Investment Holdings, Inc. If there is a release, HazMat
is most likely
. liable.
117
BioChemical Disposal Corporation operates a hazardous waste storage
facility. ChemCo Inc. buys BioChemical before it is discovered that the
rm’s disposal practices violated CERCLA. With respect to these violations,
Superfund imposes on ChemCo
strict liability.
118
Open Pit Excavation Inc. operates a rock quarry next to Robyn’s vineyard
and winery. Robyn les a suit against Open Pit, alleging that the quarry is
a nuisance and unreasonably inter feres with Robyn’s enjoyment of her
property. The court is most likely to award Robyn an injunction -
if letting the pollution continue is more harmful than stopping it.
119
Open Pit Excavation Inc. operates a rock quarry next to Robyn’s vineyard
and winery. Robyn les a suit against Open Pit, alleging that the quarry is
a nuisance and unreasonably inter feres with Robyn’s enjoyment of her
property. The court is most likely to award Robyn damages
if letting the pollution continue is less harmful than stopping it.
120
The exterior boundaries of land extend down to the depth of the deepest
hole and up to the height of the tallest structure and no further.
False
121
The rights that accompany a fee simple absolute include the right to use
the land for whatever purpose it is best suited, not necessarily for
whatever purpose the owner sees t.
False
122
A sale of real estate is a complicated transaction that involves certain
formalities that are not required in a sale of goods.
True
123
A quitclaim deed oers the most protection against defects in the title
False
124
A recording statute allows deeds to be recorded to give notice to the
public.
True
125
For a party to take by adverse possession, the party’s possession must be
peaceable, and not hostile or adverse.
False
126
Eminent domain is the condemnation power of government to take land
for public use.
True
127
One of the basic elements of zoning is the classication of land by
permissible use as part of a comprehensive municipal plan.
True
128
Buck owns ve acres of land in California. On the land Buck has a house
and a toolshed. There are ten large maple trees around the house. The
real property includes
the land, the house, the toolshed, and the trees
129
Roderick possesses ve hundred acres of forested property. Roderick has
the right to use the land, in cluding cutting its timber, for life. Roderick also
has the right to lease the land for a period not to exceed his life. This
ownership interest is
a life estate
130
Dian and Elton buy a duplex in Fargo, North Dakota. On the death of
either owner, that owner’s interest in the duplex passes to his or her
heirs. This is
a tenancy in common
131
Alf rents an apartment. The lease does not specify how long it will last, but
it does specify that Alf must pay rent every month. Alf’s tenancy is
a periodic tenancy
132
Region Construction Company has a right to drive its trucks across Staple
Business, Inc.’s property, which is adjacent to Region’s oce. This right is
an easement
133
With respect to Italo’s bottomland, Jacob has an easement, Kristin has a
prot, and Leopold has a license. A right to possess the bottomland is
owned by
Italo
134
Mix-It Concrete Company has the right to enter Nim’s land and remove
the rock from Nim’s quarry. This is
a pro
135
Marco conveys three acres of wetlands to Nature Preserves, Inc., with a
deed that warrants only that Marco held good title during his ownership
of the property. This deed is
a special warranty deed
136
Like statutory law, administrative law is created by legislatures.
False
137
Business has little incentive to try to inuence the regulatory environment
through lobbying.
False
138
Administrative rules simply declare policy and do not aect legal rights or
obligations.
False
139
An administrative rule may be arbitrary and capricious if the agency failed
to provide a rational explanation for its decision.
True
140
All federal agencies must follow specic procedural requirements when
fullling their basic functions.
True
141
Unlike statutes, administrative regulations do not have a binding eect.
False
142
When the meaning of a statute’s language is unclear and an agency
interprets it, a court need not follow the interpretation even if it is
reasonable.
False
143
State and federal transportation agencies may issue regulations that
conict. When a state regulation conicts with a federal regulation
the federal regulation takes precedence
144
Persons who favor the creation of a federal biotech agency to regu late the
production of genetically modied agricultural and animal products
should con cen trate their lobbying e orts on
Congress
145
Information Security Inc. pays income and other taxes collected by the
Internal Revenue Service (IRS). Like other federal administrative agencies,
the IRS was created by
Congress, through enabling legislation
146
Hu, Ivan, and Juana apply to work for King Poultry Company. These
individuals’ identities and eligibility to work must be veried by
King Poultry
147
If an employee presents false documentation of eligibility to work in the
United States, his or her employer is subject to deportation.
False
148
Restocking Warehouse Corporation keeps a le of I-9 verications forms.
To inspect this le, the appropriate government ocer must obtain
none of the choices
149
General Assembly Corporation, a U.S. employer, may hire Hilo, a non -
citizen, if Hilo is
a lawful permanent resident of the United States
150
To gain authorization for hiring a foreign worker, an employer must show
that no U.S. worker is qualied, willing, and able to take the job
True
151
To recruit employees from other countries, an employer must rst obtain
the approval of the U.S. Department of Labor
True
152
Cloud Computing & Processing Corporation wants to hire Dhani, a
noncitizen of “extraordinary ability.” To hire Dhani, Cloud Computing must
petition
U.S. Citizenship and Immigration Services
153
Employers and unions have a duty to bargain in good faith.
True
154
Food Packagers Union represents the workers of Garden Variety, Inc. The
company does not require its new hires to join the union as a prerequisite
to obtaining employment. Food Packagers would like Garden Variety to
require the workers to join after a specied amount of time on the job.
This would violate
no federal law
155
Detroit Automotive Company (DAC) agrees with its employees’ union not
to buy any nonunion-produced component parts from other rms for use
in DAC products. This is
a hot-cargo agreement
156
Hiway Trucking Company believes that International Truckers Union (ITU)
has violated a federal labor law. The appropriate step is for Hiway to
file an unfair labor practice complaint with the National Labor
Relations Board
157
During a dispute with Musicale Productions Inc., National Stagehands
Union asks the National Labor Relations Board (NLRB) for a ruling. The
NLRB rules against Musicale. The employer may appeal the decision to
the appropriate U.S. court of appeals
158
For a union election to be held, at least 30 percent of the workers to be
represented must support a union or an election on unionization.
True
159
Doctors Hospital Corporation employs seven thousand workers in seven
locations. These employees have the right to
organize
160
Employees at Resource Industries, Inc., want to form into a single union.
To constitute an appropriate bargaining unit, a group of workers must
have
a mutuality of interest
161
Labor law regulates the circumstances and conduct of strikes.
True
162
An employer may not hire substitute workers to replace strikers.
False
163
After extensive collective bargaining, Rubber Workers Union and SuperValu Tire Company cannot agree on terms. The union may
call a strike
164
After extensive collective bargaining, Union of Warehouse Workers (UWW)
and Volatile Products Company cannot agree on terms. The employer
may
lock out the UWW employees
165
It is not an unfair labor practice for an employer to contribute nancial or
other support to a labor organization.
False
166
Bonner Industries, Ltd., a private company, is considering an initial public offering. If the company goes public, it will be regulated by the:
. SEC
167
ackson owns a large apple orchard. Jackson sells buyers a standard plot of land on the orchard for a uniform price. The buyers then lease the land back to Jackson, who completely manages the apple orchards on the buyers’ behalf. Buyers then share in the profits of the apples when sold. This arrangement:
s an investment contract, because it satisfies the Howey test.
168
Internet Analytics is a successful search-engine company that wants to become a publicly traded company. As it is an Internet-focused company, company executives want to deliver its prospectus to investors exclusively via the Internet. Internet Analytics may:
deliver its prospectus to investors exclusively via the Internet because it is permitted by the SEC
169
Modern Investments is a small business that focuses primarily on securities trading in South America. The company wants to issue a securities offering to the public worth $500,000. Modern Investments is
not exempted from registration requirements under Rule 504.
170
Computer Company is planning to make a private stock offering. It hopes to net $4 million from the sale of the stock. It will not advertise the offering and will cap the number of unaccredited investors at thirty-five. It will notify the SEC of the sales and will provide all investors with a prospectus. It will not, however, assess the investment knowledge of the buyers of its stock. Computer Company's sale:
is exempt from the registration requirements of the Securities Act of 1933 under Rule 505.
171
Susan is a potential investor in MegaCo. Susan learns of a press conference held by MegaCo in which the CEO knowingly states that there are no merger negotiations between MegaCo and another company. As a result, Susan decides not to purchase stock in MegaCo. Three weeks later, the public learns that, contrary to what the CEO stated, MegaCo was actually in merger negotiations with another company. The stock price of MegaCo rises as a result and Susan sues MegaCo for violation of SEC Rule 10b-5. Susan will likely:
not win because the misrepresentation did not occur in connection with a purchase or sale of stock
172
Irene is a representative of Baroque Minerals, a publicly-traded mining company. Irene states publicly that it has discovered a significant deposit of a rare mineral in China, which promises to substantially increase the long-term revenue of the company. Unbeknownst to Irene, an unexpected earthquake that same day destroys the mine in China and blocks access to the rare mineral for years to come. The company’s stock drops as a result. Baroque Minerals will likely be
not liable under SEC Rule 10b-5, because Irene did not have a wrongful state of mind
173
Jeremy is a director of Cloud Energy. He and his wife, Janice, own a large number of shares of stock in the company. Janice is an attorney in a law firm. She finds out that her firm is planning to file a class-action lawsuit against Cloud Energy. Jeremy and Janice now know that the price of the stock will drop as soon as the lawsuit hits the news. Jeremy and Janice:
must disclose what they know about the lawsuit if they want to sell their stock before news about the lawsuit becomes public knowledge.
174
Gary is an employee of Thomaston Scientific. Gary learns that the R&D department discovered a new drug that will help treat heart disease better than similar medicines already on the market. Gary tells his friend Patrick about the discovery, discloses where the information came from and asks Patrick to keep it private. Instead, Patrick purchases stock on Thomaston Scientific and profits from the transaction. Patrick will be
. found liable under the Private Securities Litigation Reform Act.
175
California has a state law that requires registration and disclosure requirements for securities sold within the state known as a:
blue sky law
176
Marianne makes a false statement about the future earnings potential of her company, DexaCom. Shareholders sue Marianne for securities fraud. These shareholders can file their lawsuit pursuant to:
federal and state securities laws.
177
The board of directors of Consolidated Freight, Inc., are concerned about the potential for financial mismanagement by executives of the firm. In order to obtain more information about the firm’s internal financial reporting processes, the board of directors would most likely rely on the:
audit committee.
178
The chief executive officer (CEO) and chief marketing officer (CMO) of North Systems Co. filed a statement under Section 906 of the Sarbanes-Oxley Act. This statement certified that filed financial reports fully comply with SEC requirements, and that the information reported fairly represents the financial conditions and operations of the company. Regarding Section 906, the statement:
does not comply, because the chief financial officer (CFO) is missing from the statement.
179
Acme, Inc., a publicly traded company with a market value of $50 million
is exempt from filing an auditor’s report on management’s assessment of internal controls.
180
JR Shipment, Inc., a public company, has formed a corporate audit committee in order to monitor the financial operations of the firm. The corporate audit committee has four outside directors and three inside directors on the committee. Under Section 906 of the Sarbanes-Oxley Act, this committee:
is improper, because it has inside directors on the committe
181
Kibble Bites and Chow Hound, two makers of dog food, agree that Kibble Bites will sell its lamb and rice dog food in New Jersey but not in Delaware, and Chow Hound will sell its lamb and rice dog food in Delaware but not in New Jersey. Their agreement is a:
horizontal market division.
182
Taco Heaven, Burrito Joint, and Fast Fajitas are competitors in the Boston area. They have a secret agreement not to purchase any beef from Northwest Beef Growers' Cooperative. Their agreement is:1
a group boycott.
183
In a well-established market, ComBuilt produces the nation's best-selling bookkeeping software. The program is far superior to all other similar programs. ComBuilt requires all its distributors and retailers to sell the program at a specified price. This is:
known as a price maintenance agreement and may violate Section 1 of the Sherman Act under the rule of reason test.
184
Omega Sewing Machines is a nationally known manufacturer, having started in business almost fifty years ago. Omega and Betty's Sewing Store agree that Betty will be the only dealer in her state that will sell Omega machines. This type of agreement is most likely:
allowed under the rule of reason.
185
Amazing Bread begins selling its bread at a loss by cutting its price by more than one-half in an attempt to gain a considerable market share over its competitors. Once its competitors are out of the picture, Amazing Bread raises the price of its bread by 300%. This type of action is known as:
predatory pricing
186
Platte River Meat Packing Company maintains a three percent share of the beef-packing industry in the United States. Last year, it launched an unsuccessful effort to harm its competitors and garner monopoly share of the beef-packing industry. Platte River’s efforts are:
not actionable because Platte River lacked sufficient market power to ensure a dangerous probability of success and consequent serious threat of monopolization.
187
Bee Well is one of three suppliers of portable toilets located near the border between Oregon and California. All three companies operate in both states. Bee Well charges different prices to different customers depending on the distance to the locale and the number of units rented. This is:
not a violation of the Clayton Act because Bee Well can justify charging the different rates.
188
Seth owns and runs a small shoe factory. He finds a source of leather that is perfect for the new styles he has designed. To ensure himself a steady supply of the leather, he wants to buy the leather-processing plant. Seth’s proposal is known as a:
vertical merger and will most likely be legal because it will not prevent competitors of either firm from competing in the market.
189
Northern Manufacturers is prosecuted for antitrust violations by the Department of Justice, which wins its case. The judge agrees to impose criminal sanctions against Northern for the injuries it caused its competitor, Mini Lake, Inc. Mini Lake:
may recover treble damages and attorneys' fees.
190
Foreign Steel Exports, a company based in Brazil, colludes with other steel-export companies from around the world to agree on the price of steel sold in the United States, which causes the price of steel in the United States to substantially increase. This type of agreement
can be a violation of the Sherman Act.
191
DynaCorp is in the computer software market. The company’s actions demonstrate an intent to monopolize the market. Under Section 2 of the Sherman Act, a firm’s intent to monopolize a market:
s an element of the violation and must be proved by the party pursuing the claim.
192
Big Corp. and Giant Corp. both compete in the tire manufacturing industry. The two companies want to merge. A merger between these two companies would be called:
a horizontal merger.
193
Organosis is a company in the healthcare industry. The company engages in trade practices that violate antitrust laws. Organosis is subject to criminal prosecution by:
the Department of Justice (DOJ) under the Sherman Act.
194
Ballard Corporation, a U.S. company, does business overseas. In France, which is a member of the European Union (EU), Ballard Corporation works with a French competitor to divide the markets within France to maximize sales for both companies. Ballard Corporation may
face charges of violating both U.S. antitrust laws and EU antitrust laws.
195
Kimmy owns a small scrapbooking store in her community. She sells paper, glue, and other scrapbooking items. She decides one day to lower her prices a little bit because she wants to boost sales and market share so that she can take a vacation. She currently has a 12% market share. Under the Sherman Act, this likely:
Is not a violation of U.S. antitrust laws.
196
Sam lives in a subdivision that has deed restrictions that prevent drilling for oil and gas. This type of limitation is known as:
an encumbrance.
197
Abigail is the owner of a tract of land, but Umberto owns the mineral and excavation rights to that land. Umberto commences excavation in order to access the valuable minerals. While digging, he causes the surface of the land to collapse. Umberto is:
absolutely liable for any collapse
198
ara agrees to sell Butch a parcel of land. The land has a home, fifty acres of crops, and ninety acres of grassland. When Sara sells the parcel to Butch
the sale includes the crops unless the contract says otherwise
199
Brad owns a hair salon that he is selling. In the salon are various items including lobby furniture, barber chairs, wall mirrors in front of each barber chair, razors, scissors, and handheld mirrors. When he sells the hair salon, the following are most likely to be considered fixtures:
the barber chairs and wall mirrors.
200
Mary owns holds property in fee simple. Mary would like to lease the property to Jack, who wants to farm the land. Because Mary holds the property in fee simple, she:
Can lease, sell, or give the land away as she wishes.
201
Teagen owns a small cottage in which Katie, her elderly aunt, lives. Teagen wants to ensure that Katie can live in the cottage for the remainder of her life, but that when Katie dies, title to the property will return to Teagen. Teagen can accomplish this objective by granting Katie a:
life estate.
202
Jack and Jill have a tenancy in common in an apartment building. After ten years of ownership, Jill dies unexpectedly. On Jill's death, Jill's interest in the property will:
pass to Jill's heirs.
203
Marcus and Remy are owners of a condominium complex in a joint tenancy. Remy wants to leave the joint tenancy and sell his property rights to Yolanda. When Remy sells his property rights to Yolanda:
Yolanda's ownership becomes a tenancy in common with Marcus.
204
Steven and Andrea are married and live in San Diego, California. Shortly after the marriage, they purchase a home together. Two years later, Andrea inherits ranchland from her deceased father. In terms of ownership:
the home is considered to be community property, but the ranchland is not.
205
Estella agrees to lease some property that she owns to the San Juan County Historical Society for a term of one year. The Historical Society's tenancy is known as a:
fixed-term tenancy
206
Hideki owns land with a huge number of trees on it. In order to protect the land, Hideki would like to remove some of the trees, or "thin" the property. Hideki gives permission to remove all but 250 trees to Ekaterina, who runs a business carving wood art in the next town. Ekaterina likely has:
a profit.
207
In mid-July, the Jeffersons sell their home to the Trainers. The Jeffersons know that their oil furnace doesn't work. The:
Jeffersons have a duty to disclose the problem.
208
Amy and Reese are selling their home to Mitch and Kris. They sign a deed that affords the strongest covenants and provides the most protection to Mitch and Kris. This is called:
a warranty deed.
209
Jason is the owner of a large tract of land. Jason sells the property to Bertha pursuant to a quitclaim deed. Bertha later learns that Michael has a right to extract minerals from the property. In this case, Bertha:
has no claim against Jason
210
Kenneth finds a home in town that has been abandoned and moves into it. He fixes broken windows, paints the house, tends the yard and garden, and puts his name on the mailbox by the street. He contacts the county office and pays the small property tax each year with cash. The owner of the house has no idea that Kenneth is there and so has never given him permission to be there, nor asked him to move out. After a certain amount of time, Kenneth may become the owner of the house and land through the doctrine of:
adverse possession.
211
The city of Orlando has offered to purchase Neil's land to be used for the expansion of a thoroughfare through the city. Neil has rejected the city's offer so the city will now proceed with a judicial action to take Neil's land, known as:
condemnation.
212
he city of Dallas has a 300-acre tract of land. There are specific rules regarding how the land may be used and developed. This type of rulemaking is called:
zoning.
213
In a growing number of jurisdictions, when a tenant moves out of leased premises before the term of the lease expires, the landlord is required to make a reasonable attempt to lease the property to another party. Legally, this duty of landlords is called the duty:
to mitigate damages.
214
Steve leases an apartment from Ashley. According to the lease, Ashley is required to keep all plumbing in working order. After Steve has lived in the apartment for four months, the toilet breaks. Ashley refuses to fix it and thereby makes it virtually impossible for Steve to continue to live there. The result of Ashley's inaction is that:
she has constructively evicted Steve.
215
AT&T wants to obtain additional rights to operate within the 700 MHz spectrum in the United States. The Federal Communications Commission (FCC) has rules and regulations that govern wireless spectrum auctions. The FCC is
an administrative agency.
216
Congress passed the Securities Exchange Act of 1934, which created the Securities Exchange Commission. This legislation, which created an independent regulatory agency, is known as:
enabling legislation.
217
Theo is injured at work and files a workers' compensation claim, which is administered by the workers' compensation agency in his state. His employer disputes the extent of Theo's injuries. The case is heard by an administrative law judge ("ALJ"), who decides the case in the employer's favor. Theo's attorney tells him that the ALJ's decision cannot be appealed to a court because:
he must first appeal the case to the workers' compensation board that heads the state agency.
218
The Environmental Protection Agency (EPA) passes a proposed rule change to the Clean Air Act related to the discharge of emissions by factories. The EPA’s action would be considered arbitrary and capricious for all of the following reasons except:
it failed to provide the required time for public comment.
219
BP violated the Clean Air Act by discharging pollutants from one of its refineries and was unable to reach a settlement with the EPA regarding a violation of the law. The EPA plans to go forward with a trial on this matter, which will be heard by:
an administrative law judge (ALJ).
220
The Food and Drug Administration (FDA) is investigating a report that Cherise Cosmetics Co. is in violation of purity and testing regulations. The FDA wants Yasmin, the lead chemist for the company, to testify at an administrative hearing. Yasmin refuses, so the FDA:
issues an ordinary subpoena.
221
The Securities and Exchange Commission (SEC) charges the Able Baker Co. (ABC) with violating an administrative rule regarding the sale of securities. ABC did not realize that in its search for capital it became subject to securities regulations. ABC may attempt to settle the case rather than proceed to litigation because:
a settlement is less costly than litigation.
222
UsAgainstThem, a nonprofit environmental group, is contesting the EPA’s interpretation of a rule that has allowed a refinery to offset an increase in emissions relating to one part of the refinery by reducing emissions in another part of the refinery. In challenging the EPA’s interpretation, a court will likely:
a. refer the matter to an agency subcommittee.
b. defer to the agency’s interpretation.
c. dismiss the suit for lack of standing.
d. seek advice from Congress.
defer to the agency’s interpretation
223
William wants to obtain information from the Securities and Exchange Commission (SEC) regarding the number of active cases related to insider trading. To request this information, he would need to file which of the following with the SEC:
a Freedom of Information Act request.
224
The Environmental Protection Agency conducts meetings to discuss the possibility of creating additional regulations within the next five years. Under the Government in the Sunshine Act, the meetings:
may be closed to the public
225
Assume that Congress passes a law establishing a new administrative agency to oversee cyberlaw issues. The agency writes rules to enable it to carry out its duties. The rules written by the agency will be known as a part of:
administrative law.
226
Joseph is appointed to serve as an officer for a federal agency. He is appointed by the president of the United States and confirmed by the U.S. Senate. He is to serve for a six-year, fixed term and cannot be removed without cause, even if there is a change in the president. Joseph is most likely serving in:
an independent agency.
227
The Food and Drug Administration (FDA) is an example of an executive agency. If Fred Smith is an officer in the FDA and he fails to perform his duties properly, the power to remove him lies with:
the president of the United States.
228
The Equal Employment Opportunity Commission (EEOC) issues a statement describing how it will apply a section of the Americans with Disability Act. This statement is an example of a(n):
interpretive rule.
229
Carla works for the EPA. Her department determines that a new rule is necessary to help protect seabirds along the California coast. Carla is in charge of the notice of the proposed rulemaking. This means she must draft a notice of the proposed rulemaking proceedings to be published in
the Federal Register.
230
he Equal Employment Opportunity Commission (EEOC) issues a statement describing how it will apply a section of the Americans with Disability Act. After exhausting the administrative remedies, Jill files a lawsuit in federal court alleging that the EEOC incorrectly interpreted the statute. The court likely will:
give deference to the EEOC’s interpretation so long as it is reasonable.
231
Jonah owns a food processing company. His business was recently raided by U.S. Immigration and Customs Enforcement agents based on a tip that he was employing undocumented workers. In defending against this charge, Jonah may assert any of the following except:
failure to maintain proper paperwork evidencing the right to work.
232
Jake Williams is an Arizona state police officer. Marcy Smith is driving her car on an Arizona highway. Officer Williams pulls over Marcy because she is driving at an excessive speed. Officer Williams checks the immigration status of the driver, Marcy, and arrests her because she failed to carry required documentation. Officer Williams:
d. may check Marcy's immigration status, but may not arrest Marcy because a state may not make it a crime to fail to carry documentation.
233
Toffel Manufacturing has been requested by its employees' union to bargain with it. Union representatives express interest in negotiating wages and working hours for its workers. Management at the company declines to bargain with the union because any renegotiation would increase the company's operating costs. Toffel Manufacturing's refusal to bargain:
is not permitted because employers and unions have a duty to bargain in good faith, and bargaining is mandatory for subjects relating to wages or working hours.
234
Members of the Metal Workers Union are in negotiations with MetalCo, their employer. Union members want MetalCo to agree to not handle or use any materials provided by MetalCo's suppliers that employ nonunion employees. This practice:
is not permitted because it is an illegal hot-cargo agreement.
235
Forest Products is a mill that has always successfully resisted unionization of its workers by offering better pay and benefits than other employers. Nevertheless, Wilson and several others would like to unionize. The first step they will need to take is to:
have workers sign authorization cards.
236
Melinda is a leader of a group attempting to unionize employees of an automobile factory. Melinda asks workers to stop what they are doing on the assembly line in order to read a flyer and fill out a three page survey. Managers of the automobile factory:
can prevent Melinda's unionization activities if it has a legitimate business reason for doing so.
237
Negotiators representing Levesque, Inc., are in negotiation with the employees' union regarding terms of a new collective bargaining agreement. Levesque does not want to renegotiate, as it received favorable terms under the current agreement. In order to hold off the union as long as possible, Levesque has been giving unions reasons why they cannot negotiate right now for over eighteen months. This practice is likely:
. not a permissible negotiating strategy because excessive delaying tactics constitute impermissible bad faith bargaining.
238
BigCo's unionized employees and management are involved in difficult negotiations. Union members want to put pressure on BigCo executives to reach an agreement. Union members decide to direct a boycott against BigCo's leading customers in order to pressure BigCo to agree with the union's proposed terms. This action:
is an illegal secondary boycott.
239
Members of the Service Workers Union (SWU) are preparing to strike, as negotiations with their employer, Holiday Hotels, have broken down. However, SWU's current collective bargaining agreement with Holiday Hotels has a no-strike clause, a provision in the agreement in which the SWU promised that during the life of the contract the employees will not engage in strikes, slowdowns, or other job actions. SWU leadership wants to ignore the no-strike clause and strike anyway. This decision is:
illegal because a no-strike clause is an enforceable term of a collective bargaining agreement.
240
Meg needs an electrician to do some work at her home. Her father advises her to make sure that the firm she plans to hire is not a closed shop. Meg is not sure what this means, but later learns that the "closed shop" that her father was referring to is:
a firm that requires union membership by its workers as a condition of employment.
