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Law
Q:
Explain the three critical stages of the securities registration process.
Q:
Describe Section 11 of the 1933 Securities Act and explain the defense against it.
Q:
The Sherman Antitrust Act forbids monopolization, attempts to monopolize, and conspiracies to monopolize.
Q:
Injured parties may sue for injunctive relief and treble damages under the Clayton Act.
Q:
In general, criminal law remedies are not available under the Clayton Act.
Q:
When competitors collude, conspire, or agree among themselves, they are engaging in vertical restraints of trade.
Q:
Describe the differences between the two classes of partners in a limited partnership.
Q:
List the potential problems with the partnership form of doing business.
Q:
Define and describe common stock, preferred stock, and debt.
Q:
Define the term initial public offering (IPO).
Q:
What are the components of a registration statement?
Q:
The _____ defense against a takeover involves the target company selling off its most attractive assets.
A. greenmail
B. crown jewel
C. poison pill
D. golden parachute
Q:
Which of the following is a management's takeover defense strategy that gives current shareholders a tender offer-triggered right to buy additional stock at a discount, thus diluting the hostile bidders shares?
A. Golden parachute
B. Greenmail
C. Poison pill defense
D. Crown jewel defense
Q:
_____ refers to the severance pay packages the target's officers may have negotiated to protect themselves in the event of a takeover.
A. Greenmail
B. Golden parachutes
C. Crown jewels
D. Poison pill
Q:
Under the 1933 Act, a draft prospectus is included with the filed registration statement. This is known as a _____ prospectus.
A. greenmail
B. red herring
C. crown jewel
D. blue sky
Q:
The principal defense against a Section 11 claim is _____.
A. proxy access
B. disgorgement
C. due diligence
D. broker voting
Q:
_____ defense refers to a resistance tactic in which the targets management uses corporate cash to buy back the tender offeror's current stake, with a significant premium to "go away."
A. Greenmail
B. Crown jewel
C. Poison pill
D. Golden parachute
Q:
Which of the following presents the companys assets, liabilities, and equity in a registration statement?
A. Income statement
B. Balance sheet
C. Statement of cash flows
D. Supplemental information
Q:
Identify the correct statement about the Securities Act of 1933.
A. It allows interstate offering of a new security until a registration statement has been filed with and approved by the Securities and Exchange Commission.
B. It ensures partial disclosure of material facts about the investment opportunity to offerees.
C. It does not guarantee the economic merits of any investment opportunity.
D. It gives the Securities and Exchange Commission the power to suspend trading if it suspects price manipulation.
Q:
Which of the following statements is true of the Securities Act of 1934?
A. It allows interstate offering of a new security until a registration statement has been filed with and approved by the Securities and Exchange Commission.
B. It ensures partial disclosure of material facts about the investment opportunity to offerees.
C. It guarantees the economic merits of any investment opportunity.
D. It gives the Securities and Exchange Commission the power to suspend trading if it suspects price manipulation.
Q:
Carey, the owner of a corporation, uses the business checking account to pay his personal bills. He also makes business deals knowing the business cannot pay the invoices. If he is sued by one of his creditors, which of the following courses of action is most likely to be taken by the court?
A. Pierce the corporate veil.
B. Apply the business judgment rule.
C. Terminate the corporation.
D. Impose the Rochdale Principles.
Q:
Which of the following legal doctrines will the court apply if the owners of a corporation fail to maintain a formal legal separation between their business and their personal financial affairs?
A. Respondeat superior
B. Piercing the Corporate Veil
C. The Business Judgment Rule
D. The Rochdale Principles
Q:
Which of the following acts prohibits broker voting unless specific instructions are received from the shareholder?
A. The Private Securities Litigation Reform Act
B. The Securities Exchange Act
C. The National Securities Markets Improvement Act
D. The DoddFrank Act
Q:
Which of the following is true of the Securities Act of 1933?
A. It guarantees the economic merits of any investment opportunity.
B. It prohibits full disclosure of all material facts about the investment opportunity to offerees before they invest.
C. It forbids any interstate offering of a new security until a registration statement has been filed with and approved by the Securities and Exchange Commission.
D. The Securities and Exchange Commission has repealed the 1933 Acts prescribed relationship between solicitation or sales of a security and the registration process.
Q:
According to the 1933 Act, during the _____ period, no sales are permitted but a limited amount of solicitation is allowed.
A. shelf registration
B. waiting
C. prefiling
D. posteffective
Q:
Which of the following refers to a business venture that has no legal existence apart from the owner?
A. Corporation
B. Limited liability company
C. Sole proprietorship
D. Partnership
Q:
Which of the following statements is true of a limited liability partnership?
A. It is taxed like a general partnership.
B. No annual filings or fees are required.
C. To bring a limited liability partnership into existence, the owners file articles of organization with the state.
D. It is more like a limited liability company than a general partnership.
Q:
The legal doctrine that makes the employer liable for an employee's acts is _____.
A. respondeat superior
B. res ipsa loquitur
C. piercing the corporate veil
D. caveat emptor
Q:
If a delivery truck driver negligently hits a child in the street, the company for which the driver works will be liable for the injuries under the legal doctrine of _____.
A. caveat emptor
B. respondeat superior
C. piercing the corporate veil
D. res ipsa loquitur
Q:
Which of the following statements is true of the sole proprietorship form of business organization?
A. Legal filings are required to establish a sole proprietorship.
B. A sole proprietorship is a separate legal entity.
C. The owner of a sole proprietorship is not personally liable for all obligations of the business.
D. A sole proprietorship is not a taxable entity.
Q:
On termination of a corporation, which of the following has the highest priority for payment?
A. Dividend arrearages owed to preferred shareholders
B. Claims of common shareholders
C. Claims of creditors
D. Claims of directors
Q:
Which of the following is a feature of a corporation?
A. Double taxation
B. Unlimited liability
C. Definite duration
D. Prohibition of tax-deductible fringe benefits
Q:
Although the law of partnerships originated in the common law, all states except _____ adopted the Uniform Partnership Act.
A. Louisiana
B. Alabama
C. Nevada
D. Wisconsin
Q:
Which of the following statements is true of the formation of partnerships?
A. Partnership accounting systems are the least expensive of all the business forms.
B. The partnership form generally requires a number of annually recurring events such as state filings or statutorily mandated meetings of owners.
C. The vast majority of partnership agreements are written.
D. The co-owners of a partnership must intend to join in the sharing of risks and rewards via the active conduct of business.
Q:
Which of the following is true of the partnership form of business?
A. The vast majority of partnership agreements are written.
B. An assignee of a partnership interest has the right to participate in control and enjoys the status of partner.
C. The partners are not personally liable for the partnership's obligations should it default.
D. Events in the private lives of the partners can seriously impact the business venture.
Q:
Which of the following is true of limited liability companies?
A. The management structure of a limited liability company is extremely rigid.
B. A single-member limited liability company cannot be treated as a corporation.
C. The operating agreement of a limited liability company is most likely to be in the oral form.
D. To create a limited liability company, the owner(s) must file articles of organization with the state.
Q:
Which of the following statements about corporations is true?
A. A promoter files articles of incorporation with the state government to create a corporation.
B. When a corporations liabilities exceed its assets, its creditors can reach the personal assets of the shareholders.
C. A corporation need not establish books of accounts.
D. When an employee or director commits a tort or crime while conducting corporate business, the corporation is not liable for the consequences.
Q:
Corporations distribute their aftertax income to their shareholders as _____.
A. fringe benefits
B. dividends
C. exempt securities
D. disgorgements
Q:
Equity holders claims are always satisfied before creditors claims.
Q:
Although shareholders are the owners of the corporation, control rests with the board.
Q:
The Securities Act of 1933 seeks to ensure full disclosure of all material facts about the investment opportunity to offerees before they invest.
Q:
Online trading services provide professional guidance to investors.
Q:
Blue sky laws are primarily applicable to solely intrastate offerings.
Q:
In the context of the capital structure of corporations, equity capital has a short-term horizon.
Q:
In general, the creditors of a corporation cannot reach the personal assets of the shareholders to satisfy the corporations obligations.
Q:
Closely held corporations face the loss of limited liability through application of the doctrine known as piercing the corporate veil.
Q:
An S corporation pays double tax on its income.
Q:
Common stockholders share all three property rights associated with stock ownership in proportion to their holdings.
Q:
Sole proprietorships are mutual agencies.
Q:
In a limited liability company, the owners are referred to as interest holders.
Q:
In a limited partnership, the limited partners manage the business and are personally liable for all losses.
Q:
A shareholder derivative suit is brought by a minority shareholder, but any recovery inures to the corporation.
Q:
Describe the American economy during the time of deregulation. Highlight the excessive regulation argument and the biggest risk it posed.
Q:
Explain illegal insider trading.
Q:
The owners of a corporation are called stockholders.
Q:
A partnership offers limited liability to its owners.
Q:
Differentiate among the three types of rules enacted by administrative agencies. Describe the formal and informal rule making process of an agency.
Q:
Elaborate on the executive and congressional constraints on agencies.
Q:
Describe the three broad categories of the federal regulatory agencies authority.
Q:
A(n) _____ is an economics argument claiming that an individual or business that is protected from risk will increase its risk-taking behavior in the future in the belief that a bailout will follow, if needed.
A. unjust enrichment
B. unconscionable contract
C. wrongful discharge
D. moral hazard
Q:
Since the late 1970s, the United States has been in a period of deregulation during which:
A. federal agencies were newly created to undertake legislative functions of the government.
B. administrative agencies acted as governments, performing purely executive, legislative, and judicial roles.
C. federal powers were separated from the powers of the states.
D. great efforts were made to reduce the role of government in big portions of American life.
Q:
When is government intervention in a free enterprise economy justified? Explain any two rationales for the need of government regulation.
Q:
In the context of political process, what are the three main arguments that have emerged regarding market regulation by the government?
Q:
Why are the Commerce Clause and states police power potentially in conflict?
Q:
Explain the difference between state and local regulation in the context of their impact on business practices.
Q:
Which of the following statements relates to procedural rules?
A. They define rights and duties, such as crimes and punishments, and civil rights and responsibilities.
B. They impose new duties on affected parties and have the effect of law.
C. They delineate a federal agencys internal operating structure and methods.
D. They offer a federal agencys view of the meaning of those statutes for which the agency has administrative responsibility.
Q:
Federal Trade Commission rules providing for a cooling-off period of three business days within which the buyer may cancel door-to-door sales contracts are an example of an agencys application of its _____ rules.
A. procedural
B. interpretive
C. legislative
D. substantive
Q:
Internal Revenue Service regulations are an example of _____ rules.
A. substantive
B. interpretative
C. legislative
D. procedural
Q:
Which of the following statements is true of rule-making by agencies?
A. The agencies create rules that resemble laws but do not have the force of laws.
B. The federal government provides an online portal where the public can comment on proposed rules.
C. Legislative rules delineate the agencys internal operating structure and methods.
D. Procedural rules are policy expressions having the effect of law.
Q:
Which of the following statements is true of judicial review of agency rules?
A. Review of controversial, high visibility rules issued by agencies is not common.
B. Courts take a broad approach to judicial review of such cases.
C. Courts cannot overrule the agencies interpretation of a rule.
D. Judges readily sustain the judgment of the agency where reasonable.
Q:
Which of the following statements is true of the Federal Communications Commissions (FCC) indecency rules?
A. FCC rules increase the prices of cable TV services that broadcast indecent material.
B. FCC rules forbid indecent material on conventional broadcast services when children are likely to be in the audience.
C. FCC rules forbid indecent material on cable networks between 6 pm and 10 am.
D. FCC rules apply to subscription services such as programming delivered via satellite.
Q:
Identify the type of rules that offer an administrative agencys view of the meaning of those statutes for which the agency has administrative responsibility.
A. Interpretive rules
B. Legislative rules
C. Procedural rules
D. Substantive rules
Q:
Which of the following statements is true of executive functions of federal agencies?
A. They always offer formal advice in response to requests.
B. They are empowered to resolve tax disputes.
C. They do not deal with the compliance with laws and regulations.
D. They hear workers compensation claims but cannot resolve them.
Q:
Which of the following is an example of an executive function performed by a federal agency?
A. Leasing federal lands
B. Enacting procedural rules
C. Regulating internal revenue service
D. Publishing all federal rules and orders daily
Q:
The _____ was enacted to provide a framework for agency rule-making and to detail broad standards for judicial review of agency decisions.
A. Public Records Act
B. Political Reform Act
C. Administrative Procedure Act
D. Uniform Adoption Act
Q:
Which of the following is an example of the federal regulatory authority of control of information?
A. Preventing the entry of certain products into the market
B. Directing that warning labels be stuck on products
C. Uniform pricing of cable TV services
D. Banning of a flame retardant used in childrens nightwear
Q:
CartMed Inc., an over-the-counter (OTC) drug manufacturer, is directed by the Office of National Drug Control Policy (ONDCP) to refrain from manufacturing cough syrups that exceed 22 percent alcohol content for children below the age of ten. This authority of the ONDCP falls under which of the following federal regulatory categories?
A. Control of information
B. Control of rates
C. Control of standards
D. Control of cost
Q:
Identify the correct statement about a federal agency.
A. An independent federal agency is usually located within the departments of the governments executive branch.
B. In a rule-making situation, a federal agency avoids using the hybrid process.
C. In creating a federal agency, Congress delegates a portion of its authority to that body.
D. A federal agency does not have substantial authority to regulate a specified segment of American life.
Q:
Which of the following served as the basis for the creation of a fourth branch of government by Congress?
A. Agency commissioners are appointed in staggered terms, typically of three years duration.
B. Agencies must delegate a portion of their authority to Congress as they recognize that they are not the appropriate bodies to address the specific elements of certain problems.
C. The appointment of agency commissioners is done by the Senate with the advice of the president.
D. The appointment of agency commissioners for most of the independent agencies must reflect an approximate political balance between the two major parties.
Q:
The primary purpose of most of the early agencies was to address:
A. economic concerns.
B. discrimination issues.
C. environmental concerns.
D. product safety issues.