Investment Final Exam Score 100%

Question 1 

1. The best index to assess the performance of a portfolio diversified among several asset classes such as stocks, bonds and real estate is

the Lipper Index.

the NYSE Composite Index.

the Value Line Index.

No suitable index exists.

4 points   

Question 2 

1. Lipper indexes are to assess the performance of 

I and II only

I and III only

I, II and III only

I, II, III and IV 

4 points   

Question 3 

1. Which one of the following provides the greatest reduction in total risk?

diversification

asset allocation

security selection

beta reduction

4 points   

Question 4 

1. A moderate asset allocation alternative might include 

I and II only

I, III and IV only

I, II and III only

I, II, III and IV

4 points   

Question 5 

1. To compute the holding period return on a bond investment, the investor should divide the purchase price of the bond into 

any increase or decrease in the bond's price.

the annual coupon payment.

the bond's yield to maturity.

coupon payments received plus or minus any change in the bond's price.

4 points   

Question 6 

1. Asset allocation should focus on

the investor's financial and family situation.

selection of individual securities within an asset class.

maximization of current income.

maximization of short-term profits.

4 points   

Question 7 

1. Which of the following is a good reason to invest in convertible bonds?

They often have higher than normal coupon rates.

They offer protection against rising interest rates.

They tend to be issued by stable, low-risk companies.

They offer predictable income and a chance to profit from an increase in the stock price.

4 points   

Question 8 

1. Investors who buy mutual funds that have had large gains over the last few years are exhibiting a tendency known as 

overconfidence.

narrow framing.

loss aversion.

representativeness.

4 points   

Question 9 

1. When a bond is called, the bondholder generally faces a rate of return that is lower than expected.

True 

False 

4 points   

Question 10 

1. Which of the following accurately reflect appropriate investment guidelines?

I and II only

III and IV only

I, III and IV only

I, II, III and IV

4 points   

Question 11 

1. One type of mutual fund spreads investors' money across equity markets, bond markets, and money markets. Moreover, as market conditions change, the amount of money invested in each market sector will change. This type of mutual fund is known as a(n)

socially responsible fund.

fiscally responsible fund.

growth-and-income fund.

asset allocation fund.

4 points   

Question 12 

1. The longer the time to maturity, the less sensitive a bond's price will be to changes in interest rates.

True 

False 

4 points   

Question 13 

1. Which one of the following statements concerning interest rates is correct?

A decrease in the money supply will cause interest rates to decline.

A federal budget surplus will cause interest rates to decline.

Economic expansions will cause interest rates to decline.

Rising interest rates in foreign countries will cause U.S. interest rates to decline.

4 points   

Question 14 

1. Mutual fund investors are primarily exposed to ________ and ________ risks.

market; financial

market; inflation

business; financial

business; inflation

4 points   

Question 15 

1. "Baby blues" is a term used to refer to telecom stocks.

True 

False 

4 points   

Question 16 

1. A portfolio with a beta of 1.06

is 106% more risky than the overall market.

has less risk than the lowest risk security held within that portfolio.

is 6% more risky than a risk-free asset.

is slightly more risky than the overall market.

4 points   

Question 17 

1. From October 2007 to March 2009, stock prices as measured by the S&P 500 Index 

nearly doubled in value.

lost more than half their value.

declined by nearly 10%.

rose by nearly 25%.

4 points   

Question 18 

1. The Capital Asset Pricing Model (CAPM) includes which of the following in its base assumptions?

I and III only

II and IV only

I, II and III only

I, III and IV only

4 points   

Question 19 

1. Jobs in which of the following fields require an understanding of the investment environment?

I and IV only

I, II and IV only

II, III and IV only

I, II, III and IV

4 points   

Question 20 

1. Short-term investments generally provide liquidity, safety, and a high rate of return.

True 

False 

4 points   

Question 21 

1. If the S&P 500 index is at 1,461, then the cash value of an S&P 500 index option is

$14.61.

$1,461.

$14,610.

$146,100.

5 points   

Question 22 

1. Writing covered calls protects the writer from losses if the price of the underlying stock declines.

True 

False 

5 points   

Question 23 

1. The value of an interest rate call option

varies directly with the price of the underlying corporate bond.

increases when the yield on the underlying Treasury security rises.

is based on the market price of U. S. Treasury securities.

decreases when the price of U.S. Treasuries decreases.

5 points   

Question 24 

1. ETF options are settled in 

cash.

ETF shares.

share of the companies in the index.

The writer has the choice of settling in either cash or ETF shares.

5 points   

Question 25 

1. The longer the time to expiration, the lower the option time premium tends to be.

True 

False 

5 points   

Question 26 

1. One reason that writing options can be a viable and profitable investment strategy is that

the option writer collects the quarterly dividends.

most options expire unexercised.

an option writer determines when the option is exercised.

an option writer can exercise the option to avoid a potential loss.

4 points   

Question 27 

1. LEAPS is an acronym for

Lehman and Ellsworth Authority Strips.

Liability & Equity Asset Securities.

LYONS Earnings Anticipation Stocks.

Long-Term Equity Anticipation Securities.

4 points   

Question 28 

1. A put has fundamental value as long as

the market price of the underlying financial asset has a positive value.

the market price of the underlying financial asset is less than the strike price.

the strike price of the put is greater than the time premium of the put.

the strike price of the put is less than the market value of the underlying asset.

4 points   

Question 29 

1. Which of the following affect the value of puts and calls written on shares of common stock?

I and II only

I, II and III only

II, III and IV only

I, II, III and IV

4 points   

Question 30 

1. The buyer of a put expects the price of the underlying stock to rise.

True 

False 

4 points   

Question 31 

1. Rights and warrants are the riskiest types of options.

True 

False 

4 points   

Question 32 

1. The three steps in determining a stock's intrinsic value are

III and IV only

I, II and IV only

I, III and IV only

4 points   

Question 33 

1. MBA Inc. will pay a dividend for the first time at the end of 2013. It projects the following dividend per share:

Beginning with 2016 dividends will grow at 4% per year. The required rate of return is 12%. The intrinsic value of MBA shares is

$25.37.

$27.85.

$28.96.

$38.50.

4 points   

Question 34 

1. A company has an annual dividend growth rate of 5% and a retention rate of 40%. The company's dividend payout ratio is

35%.

40%.

45%.

60%.

4 points   

Question 35 

1. If the market multiple is 23.0 and the P/E ratio of a company is 27.4, then the stock's relative P/E is

0.84.

1.19.

3.21.

4.40.

4 points   

Question 36 

1. The governmental agency that oversees the capital markets is the

Federal Trade Commission.

Federal Reserve.

Securities and Exchange Commission.

Fair Trade and Banking Agency.

4 points   

Question 37 

1. Crossing markets are those that

trade foreign securities.

conduct transactions between institutional and individual traders.

fill only the orders which have opposing orders at identical prices.

conduct business at locations in varying time zones.

4 points   

Question 38 

1. Individuals can use the Internet to

I and IV only

II and III only

I, III and IV only

I, II, III and IV

4 points   

Question 39 

1. Which of the following indexes would best reflect the performance of a large, diversified portfolio with equal amounts of money invested in each company.

the S&P 500 Index

the Russell 3000

the NASDAQ 100

the Value Line Composite Index

4 points   

Question 40 

1. Over a period of time if an investment has not met its return objective, it should be sold.

True 

False 

4 points   

Question 41 

1. Sharpe's measure of portfolio performance compares the risk premium on a portfolio to

a broad-based market index such as the S&P 500 index.

the portfolio's standard deviation of return.

the portfolio's beta.

the prevailing risk-free rate of return.

4 points   

Question 42 

1. A portfolio has a total return of 14.5%, a beta of 1.54, and a standard deviation of 17.6%. If the risk free rate is 4.5% and the market return is 10.2%, then Treynor's measure of this portfolio's performance is

2.8%.

3.7%.

6.5%.

9.4%.

4 points   

Question 43 

1. Ella owns a stock with a beta of 1.34 and a standard deviation of 16.4%. The stock has a total return of 14.8%. The market risk premium is 8.5%, while the return on the market portfolio was 12.0%. What is the value of Sharpe's measure for Ella's portfolio?

0.21

0.38

0.69

0.90

4 points   

Question 44 

1. The constant-ratio plan

requires the establishment of trigger points for portfolio rebalancing.

utilizes a predetermined ratio between desired current yield and expected capital gains.

strictly adheres to a buy-and-hold strategy.

is an attempt to time the cyclical movements of the market.

4 points   

Question 45 

1. An investor adopts a policy of investing in both an aggressive mutual fund and a short-term bond fund. When the value of the aggressive fund exceeds 65% of the portfolio value, shares of that fund are sold such that the aggressive fund represents only 45% of the portfolio. This is an example of a ________ plan.

constant-dollar

dollar-cost averaging

constant-ratio

variable-ratio

 

HW-2032 Agency and Employment Law

 

Agency and Employment Law

 

1. Lee hires Zeke to sell her house. She tells Zeke to ask for $200,000, but says she will take $175,000. Zeke's friend Victor asks Zeke about the house, and Zeke tells him that Lee will take $175,000. Victor offers $175,000, and Zeke accepts. Zeke violated his duty of

A. obedience.

B. loyalty.

C. account.

D. due diligence.             

2. Bob's company was found in violation of ERISA. The violation likely relates to

A. workplace safety.

B. Bob's pension plan.        

C. failure to pay overtime.

D. workers' compensation.

3. Steve is Jason's agent, and it's within Steve's authority as Jason's agent to purchase homes on Jason's behalf. Steve contracts with Albert to buy Albert's house for Jason. Steve, however, doesn't tell Albert that he's buying the house on Jason's behalf or that he's acting for another individual. Under the terms of the contract, which of the following statements is true?

A. Only Jason can be held liable.

B. Only Steve can be held liable.

C. Neither Steve nor Jason can be held liable.

D. Both Steve and Jason can be held liable.

4. Tony tries to start a union at Big Tech, Inc. His employer learns of his attempt to organize a union and fires him. Big Tech's actions

A. are permitted if the state has adopted right-to-work legislation.

B. constitute an unfair labor practice.

C. are permitted if they first give Bob notice forbidding the union.

D. are permitted.

5. Sam gives Dennis a written power of attorney to sell his house. Though the power of attorney doesn't expressly authorize Dennis to do so, Dennis purchases an ad in the newspaper to advertise sale of the house. The newspaper sends a bill to Sam. If Sam is liable for the bill, it's most likely based on agency by

A. appointment.                 

B. implication.

C. operation of law.

D. estoppels.

6. David gives Ethel power of attorney. David then has a nervous breakdown and becomes insane. Ethel has the authority to act on David's behalf

A. with regard to personal property but not real property.

B. only until Tom regains his sanity.

C. if the power of attorney is a durable power of attorney.

D. by necessity.

7. Jane works for Big Business, Inc., as a sales representative. The boss decides to fire her because she isn't a Mets fan. The boss can

A. fire Jane.

B. not fire Jane if here work was satisfactory.

C. not fire Jane because of the Civil Rights Act of 1964.

D. not fire Jane if she agrees to become a Mets fan.

8. Javier gives written authorization to Tamara to sell his house. Javier dies on the October 4. On October 8, Tamara enters into a written contract on behalf of Javier to sell the house to Trudy for $100,000. Before Tamara entered into the contract, she showed the written authorization to Trudy. Javier's estate is

A. liable if Tamara knew Javier was deceased at the time of the contract.

B. liable if the price is fair.

C. not liable.

D. obligated to sell for $100,000 because Tamara had express authority.

9. Molly borrowed $5,000 from Larry and, as collateral, gave him jewelry and authority to sell the jewelry if she defaulted. Afterward, Molly had second thoughts and revoked the agency. Which of the following statements is true?

A. Molly can terminate the agency if she paid the loan.

B. Molly can terminate the agency based on impossibility of performance.

C. Molly can't terminate the agency unless she claims bankruptcy.

D. Molly can't terminate the agency unless Larry sold the jewelry.

10. Tim hires Brett to mow his yard once a week, using the mower stored in Tim's garage. Tim then gives the mower to his brother Ed, who lives in another town. Brett complains to Tim, pointing out that Brett won't incur expense to rent a mower to perform the contract. Tim says Brett is being uncooperative. Which of the following statements is legally true?

A. Tim violated his duty of loyalty.

B. Brett violated his duty of loyalty.

C. Tim violated his duty of cooperation.

D. Brett violated his duty of cooperation.

11. Bob's company was found in violation of OSHA. The violation likely relates to

A. workplace safety.

B. racial discrimination.

C. failure to pay overtime.

D. workers' compensation.

12. Carter wants to impress his boss, Marco. Carter approaches one of Marco's potential clients and negotiates a contract with the client on Marco's behalf. The client agrees and signs the contract. Marco, however, doesn't know about Carter's negotiation. Carter lacks the authority to negotiate on Marco's behalf. When Marco finds out, he is so pleased about the contract that he overlooks Carter's actions and tells Carter he did an excellent job landing the client. This forms an agency by

A. operation of law.

B. agreement.

C. estoppel.          

D. ratification.

13. The right to notice of a plant closing or massive layoffs due to sale of a business is derived from the

A. Antitrust Procedures and Penalties Act.

B. Hart-Scott-Rodino Antitrust Act.

C. Employee Retirement Income Security Act.

D. Worker Adjustment and Retraining Notification Act.

14. Sally works for Big Tech, Inc. One day, the boss calls her into his office and says, "Women just don't get tech. You're fired." Sally sues. In the course of the litigation, the company discovers that Sally was pilfering paper from the company storage, and under the employee handbook, this is grounds for termination. Sally's discharge is

A. not wrongful because gender is a bona fide job qualification for working in tech.

B. wrongful because evidence can't be used in a gender discrimination case.

C. wrongful because the employer intended to fire her based on gender.

D. not wrongful because the employer discovered evidence that justifies the firing.

15. Anna gives Doris a power of attorney. Doris does business with Big Bank as Anna's agent. Anna then revokes the power of attorney. Anna is not liable on any contracts Doris made

A. after her agency was terminated.

B. that weren't fully performed at the time notice was received by Big Bank.

C. after Big Bank received notice that she was no longer an agent.

D. after the date of termination but before notice was received by Big Bank.

16. The union at Big Tech goes on strike. The president can petition the attorney general to seek an injunction stopping the strike for 60 days if the

A. union failed to give 60 days' notice of its intent to strike.

B. strike would endanger the nation's health or safety.

C. demands of the union are unreasonable.

D. strike would result in large losses to the company.

17. Carl, a little person with dwarfism, applies for a job. He is told he won't be hired because he is a little person. Carl sues, claiming discrimination under the Civil Rights Act. Which of the following statements is true?

A. Carl has no claim.

B. Unless Carl can show that the height requirement has a disparate impact on short people, he has no claim.

C. Carl has a good claim.

D. Unless the employer can show that being of a certain height is a bona fide job qualification, Carl has a good claim.

18. Polly hires Nick to sell her house and gives him power of attorney that authorizes him to do, but the power of attorney says nothing about price. Polly tells Nick to take nothing less than $200,000. Lola offers Nick $195,000 for the house, and Nick accepts. Nick violated his duty of

A. loyalty.

B. obedience.

C. account.

D. due diligence.

19. State right-to-work laws prohibit

A. closed shops, but not union shops.

B. union shops, but not closed shops.

C. agreements requiring union membership to get or keep a job.

D. employees from forming labor unions and bargaining units.

20. Phil receives a job offer from Big Tech, Inc., in a letter that states, "If you leave your current position and join us, we will employ you for the next five years as our company expands." Phil takes the job, and he is fired after six months even though his work was satisfactory. If Phil sues and wins, the most likely reason is

A. the employment at-will doctrine.

B. express contract.

C. the state's right-to-work law.

D. promissory estoppels.

 

060471RR - Contracts, Part 2

060471RR - Contracts, Part 2

1. Horatio agrees to paint Stella's house for $1,000. Horatio fails to paint, and Stella hires Winston to paint the house for $1,000. Stella sues Horatio for breach of contract. Stella likely will receive __________ damages.

A. liquidated

B. punitive

C. consequential

D. nominal

2. Warren agrees to paint Abby's restaurant for $1,000. Warren fails to paint. Abby may be entitled to punitive damages if

A. Abby has to pay substantially more than $1,000 for someone else to perform the job.

B. Abby loses profits as a result of the breach.

C. the contract breached was both written and witnessed.

D. Warren doesn't know how to paint, misrepresented himself as a painter, and never intended to paint.

3. Bella and Connie are struggling to find jobs. They decide they want to open a child daycare center together. They see a house in the perfect neighborhood with a "For Sale by Owner." They talk to the owner, reach an agreement, and shake hands. Just before the closing on the house, at which they'll take ownership of the house, the owner decides not to sell to Bella and Connie. They tell the owner they're going to sue him for breach of contract. Bella and Connie most likely

A. will win because the owner shouldn't have entered into a contract with them if he wasn't sure he wanted to sell the house.

B. won't win because they can find another house that will work just as well.

C. won't win because they shouldn't have entered into an oral contract to buy the house.

D. will win because the owner breached his agreement to sell them the house.

4. James leases an apartment to Kyle for $900 per month rent. The written lease contains no prohibition against assignment, nor does it expressly permit assignment. Kyle assigns his rights to Harley without any consideration. James finds out and objects. The assignment is

A. invalid because James didn't consent to the assignment.       

B. valid because the written lease didn't prohibit it.

C. valid because there's no consideration for the assignment.

D. invalid because the lease didn't expressly permit assignment.

5. One name for a promise made by one party to pay another person's debts, if that person fails to pay the debt, is

A. collateral contract.

B. prenuptial agreement.

C. signature requirement.

D. condition precedent.

6. Tom and Zeke enter into a contract for Tom to paint Zeke's house for $1,000 by August 5th. Tom paints half of the house on August 6th, then demands pay. Which of the following is false?

A. Tom may not be in breach if the contract doesn't make time of the essence.

B. The contract doesn't violate the statute of frauds.

C. Tom's duties are discharged under the doctrine of substantial performance.

D. Zeke may have to pay if payment is a condition precedent to the duty to paint.

7. Robert contracts to paint Jake's house for $500. Robert then asks Elmer to perform the painting work for him. Elmer does a bad job, and Jake wants to sue for breach of contact. Which of the following is true?

A. Robert is responsible for the breach of the contract.

B. Elmer, but not Robert, is responsible for the breach.

C. Robert is responsible for the breach of the contract only if there has been a novation.

D. Robert isn't responsible if he gave Jake notice of the delegation.

8. Which of the following is an example of discharge by impossibility?

A. Jason agrees to paint Sheila's house for $1,000. Jason paints, but before Sheila pays him, she files bankruptcy. As a result,

Jason doesn't get paid.

B. Jason agrees to paint Sheila's house for $1,000. Sheila changes her mind and asks Jason not to paint. Jason agrees.

C. Jason agrees to paint Sheila's house for $1,000. Sheila later tells Jason that she won't pay him. As a result, Jason decides not to paint.

D. Jason agrees to paint Sheila's house for $1,000. Before Jason can paint, Sheila's house burns down.

9. Denise orally authorizes Shaun to sell her house. Shaun enters into a written agreement with Eric to sell him the house for $140,000. Both Shaun and Eric sign the contract. Denise learns of the agreement after the fact and decides she doesn't want to sell. If the contract is ruled unenforceable, the most likely reason is the __________ rule.

A. parol evidence

B. best evidence

C. equal dignities

D. fairness

10. Stan contracts to sell his house to Bonnie for $150,000. Stan then finds a buyer who will pay $200,000 and tells Bonnie he won't perform. Bonnie wants to make Stan honor his contract. The remedy she should seek is

A. punitive damages.

B. specific performance.

C. consequential damages.

D. compensatory damages.

11. Which of the following is an example of discharge by operation of law?

A. Xavier agrees to paint Rita's house for $1,000. Rita changes her mind and asks Xavier not to paint. Xavier agrees.

B. Xavier agrees to paint Rita's house for $1,000. Xavier paints, but before Rita pays him, she files bankruptcy. As a result,

Xavier doesn't get paid.

C. Xavier agrees to paint Rita's house for $1,000. Before Xavier can paint, Rita's house burns down.

D. Xavier agrees to paint Rita's house for $1,000. Rita later tells Xavier that she won't pay him. As a result, Xavier decides not

to paint.

12. Barb and Ned exchange e-mails in which Barb agrees to paint Ned's house for $1,000. Which of the following statements is true?

A. The contract is enforceable.         

B. The contract is unenforceable due to the statute of frauds.

C. The contract can't be enforced because electronic contracts aren't legally binding.

D. The contract can't be enforced because there's no handwritten signature.

13. Will contracts with Grace to sell her 100 lamps for $1,000. Will breaches his contractual duty to deliver the lamps, and Grace buys 100 lamps for $2,000 from another dealer. Grace sues Will for breach of contract. She will most likely receive what type of damages?

A. Consequential damages of $3,000

B. Nominal damages of $100

C. Compensatory damages in the amount of $1,000

D. Compensatory damages in the amount of $2,000

14. Elmer borrows money from Big Bank, who then assigns the promissory note and mortgage to Financial Institution for valuable consideration. Elmer isn't given notice of the assignment and continues to pay Big Bank. Financial Institution files suit, claiming Elmer is in default because Elmer failed to pay monthly payments to Financial Institution. Which of the following statements is true?

A. Financial Institution was obligated to give notice to Elmer of the assignment.

B. Financial Institution must pay Big Bank for the payments Elmer made.

C. Elmer is in default to Financial Institution because he didn't pay them.

D. Big Bank must forgive Elmer's loan because they failed to notify him.

15. Jessica orally agrees that she will sell 400 pairs of flip-flops to a customer for $600. This agreement is

A. unenforceable because of the parol evidence rule.

B. unenforceable because all necessary elements aren't met.

C. enforceable because all necessary elements are met.

D. unenforceable because of the statute of frauds.

16. Jack and Jane formed a contract in which Jack agreed to sell Jane a large amount of apples. Jack knew that Jane planned to resell the apples at the farmers' market the following weekend. Jack failed to deliver the apples as promised. Jane will most likely be able to recover

A. both compensatory and consequential damages.

B. both nominal and punitive damages.

C. compensatory damages only.

D. punitive damages only.

17. On June 29, Henry contracts to purchase American flags, which Henry intends to sell at the annual Fourth of July fireworks event, from Liz. The contract doesn't specify a delivery date. Liz delivers the flags on July 7. Henry sues for breach of contract. Which of the following will most likely happen?

A. Henry will win because of the equal dignities rule.

B. Henry will win because of the standard construction rule.

C. Liz will win because the contract didn't specify a delivery date.

D. Liz will win because she delivered within a reasonable time.

18. Which of the following acts is designed to cut down on identity theft related to the use of credit cards?

A. Uniform Electronic Transactions Act

B. Uniform Computer Information Transactions Act

C. E-Sign Act

D. Fair and Accurate Credit Transactions Act

19. Under the _______ rule, courts generally accept into evidence only the original of a writing, not a copy.

A. standard construction

B. parol evidence

C. equal dignities

D. best evidence

20. A substitution, by mutual agreement, of a new party for one of the original parties to a contract is called a

A. novation.

B. complete performance.

C. condition concurrent.

D. mutual rescission.            

 

 

 

060470RR - Contracts Part 1

060470RR - Contracts, Part 1

1. Tyler offers to dance naked on Main Street if Corey will mow Tyler's yard. Corey mows Tyler's yard.

Which of the following statements is not potential grounds for setting aside the contract?

A. Lack of serious intent to contract

B. Illegality of consideration

C. All of the above are potential grounds for setting aside the contract

D. Inadequacy of consideration

2. Josh runs over Barbara's dog. Barbara promises not to sue Josh if he pays her $200. Josh pays $200. Then Barbara sues, claiming an agreement not to sue doesn't constitute consideration. Which of the following is true?

A. Agreement not to sue is consideration only if it approximates what a court would have awarded.

B. Such contracts violate public policy and therefore are unenforceable.

C. Agreement not to sue isn't consideration.

D. Agreement not to sue is consideration.

3. Candice hires Otto to work as a tax preparer in Candice's tax return business. The employment contract restricts the ability of Otto to set up a competing business or engage in tax preparation services if Otto leaves Candice's employ. Otto discovers he likes this kind of work and wants to set up his own tax return business. He asks you whether the restrictions in his contract with Candice will be enforceable. You should tell him that

A. any restriction regarding employment is unenforceable as against public policy.

B. any restriction regarding employment will be enforceable as long as there was adequate consideration.

C. restrictive covenants regarding future employment will be enforceable if they're reasonable.

D. restrictive covenants regarding future employment will be enforceable if the value of the consideration given for the covenant equals the value of the income loss that would be caused by enforcing the agreement.

4. Delivery of unordered merchandize is considered

A. a contract to purchase unless the recipient contacts the sender to reject the merchandize.

B. a contract to purchase if the items aren't returned.

C. an offer to sell.

D. performance of a contract.

5. Madison enters into a contract with a DVD club to purchase four DVDs during the coming year. The agreement provided that she would receive an advertisement listing the main selections, which would be sent to her automatically, unless she sent a reply to stop the shipment. The DVD club sent the first month's advertisement and Madison did nothing. When Madison later received the main selection for that month she complained that she hadn't accepted it. Must Madison pay for it?

A. Yes, because the price is fair.

B. Yes, because her silence in this case constituted acceptance.

C. No, because her silence in this case didn't constitute acceptance.

D. No, because Madison didn't specifically order the goods.

6. Finn agrees to pay $100 to anyone who will paint his house. Will hears about the offer and paints. Finn refuses to pay, saying Will never formally accepted Finn's offer. Which of the following is true?

A. Will has to formally accept, but can do so within a reasonable time after painting.

B. Offer and acceptance are irrelevant if one of the parties changes position.

C. This is a bilateral contract, and Will didn't accept.

D. This is a unilateral contract and painting constituted acceptance.

7. Eric, a 17-year-old, signs a contract with the armed services to enlist. Later, Eric changes his mind and wants out of the contract. Can he void the contract based on incapacity to contract?

A. No

B. Yes, after he turns 18

C. In some states

D. Yes

8. Manny says to Carmela, "I'll paint your house for $100." Carmela says "I accept, provided you also wash the windows." Under common law, the most likely result in this case is that there's

A. a contract to paint for $100.

B. no contract.

C. a contract to paint and wash for an amount yet to be determined.

D. a contract to paint and wash for $100.

9. Which of the following is a necessary element both for fraud and for misrepresentation?

A. A fiduciary relationship

B. The intent to deceive

C. A false statement

D. A hidden problem

10. Jacques offers to paint Alisha's house for $100. Before Alisha responds, Jacques dies. Which of the following statements is true?

A. A representative of Jacques's estate must find someone to paint Alisha's house.

B. There's no contract because Alisha failed to accept Jacques's offer before he died.

C. A representative of Jacques's estate must paint Alisha's house for $100.

D. Jacques's offer has been revoked.

11. Carrie decides to offer Shelley the opportunity to purchase her motorcycle for just $500. Carrie told Jim, a mutual friend of Shelley and her, that she intended to make the offer. Later, Carrie changes her mind. Shelley approaches Carrie and says she accepts the offer. No contract was formed most likely because

A. Carrie didn't possess a serious, objective intention.

B. the terms of the offer weren't definite enough to form a contract.

C. Carrie never communicated the offer to Shelley.

D. Jim was acting as an agent for Shelley without telling Carrie.

12. Jackie tells a group of friends that she plans to sell her home. Meg asks how much Jackie hopes to get for the house, and Jackie replies, "$50,000." Meg says, "I accept your offer. I'll purchase your house for $50,000." No contract exists because

A. the offer isn't properly communicated.

B. Jackie's statements are merely preliminary negotiations.

C. Jackie doesn't seriously intend to enter a contract.

D. the terms of the offer aren't reasonably certain.

13. Jack is a mature-looking 17-year-old who lives at home with his parents. Jack wants to purchase an automobile. Jack goes to Discount Car Sales, where Bud, the car salesman, never considers that Jack may be a minor. Bud sells Jack a car, with the agreement that Jack will pay Bud $100 per month over the next five years for the car. Which of the following is true?

A. Bud can disaffirm the contract because of Jack's status as a minor at the time the contract was formed.

B. Bud can hold Jack's parents liable for Jack's contract, because Jack was a minor living in their home at the time the contract was formed.

C. Despite Jack's status as a minor, Bud can prohibit Jack from disaffirming a contract for a necessary (or basic) need.

D. Jack can disaffirm the contract because of his status as a minor at the time the contract was formed.

14. At his 80th birthday party, Graham declares that Elsie is his favorite grandchild and that he will leave Elsie $100,000 on his death. Sadly, Graham dies just three days later. No provision of his will leaves Elsie the $100,000. Elsie files a breach of contract claim against Graham's estate. The most likely result is that Elsie will lose because no contract existed due to lack of

A. contractual capacity and form.

B. agreement and consideration.

C. contractual capacity and consideration.

D. form and agreement.

15. Jordan is charged with a crime, and Jeff is chosen to be on the jury. Jordan offers to pay Jeff $500 if he votes not guilty. Jeff does so, but Jordan refuses to pay. Jeff sues Jordan for breach of contract. Jeff will

A. lose because the contract is against public policy.

B. win because Jordan materially breached.

C. win because of the statute of frauds.

D. lose because the contract is usurious.

16. Patty visits Big Grocery store and sees a table with bananas on it. Patty picks up a bunch of bananas, walks to checkout, and hands them to the cashier. This is

A. no contract.

B. an express contract.

C. an implied-in-fact contract.

D. an implied-in-law contract.

17. Regan marries at age 17. Then, she enters into a contract with Art to purchase an automobile for $10,000. She later changes her mind and wants to void the contract. Which of the following is true?

A. Regan can void the contract because she is a minor.

B. Regan can't void the contract because she is over 15.

C. Regan can't void the contract because she is married.

D. Regan can void the contract because she is married.

18. Lance e-mails Fred, offering to buy his motorcycle for $750. Fred replies, agreeing. Later, Fred declines to honor the agreement, claiming that e-mail agreements aren't enforceable. In both the initial email and the reply Lance and Fred typed their names. Which of the following is true?

A. There's no contract because e-mail agreements aren't enforceable.

B. The e-mails constitute a contract if Lance and Fred have agreed that electronic signatures can be used to create the agreement.

C. There's no contract because contracts must have hand-written signatures to be enforceable.

D. There's no contract because the e-mails weren't witnessed.

19. Juan thinks he would like to purchase Tara's house, but doesn't know whether he will be able to save enough money for a down payment on a loan. Juan agrees to give Tara $5,000 for the option to purchase her house for $150,000 sometime within the next five years. Juan and Tara reduce their agreement to writing, sign it, and Juan gives Tara $5,000. Two years later, Juan wins the lottery and now is financially able to purchase Tara's house. However, that same day Juan receives a letter from Tara revoking her offer to sell for $50,000. Which of the following is true?

A. Juan can't complain because he failed to accept Tara's offer before it was revoked.

B. Tara's revocation is effective.

C. Tara's revocation is effective as long as she refunds the $5,000.

D. Tara's revocation isn't effective.

20. Camille and Paul go to a bar, and Camille has too much to drink. Camille agrees to paint Paul's house for an agreed-on price. Camille sobers up the next day and decides she wants out of the contract. Which of the following provide Camille with the best argument for getting out of the contract?

A. Emotional duress

B. Camille's intoxication deprived her of the ability to understand she was entering into a contract.

C. The contract price is too low.

D. Camille's judgment was impaired by the alcohol.

060469RR - Business Organizations

060469RR - Business Organizations

1. Melanie and Clay are partners in a law firm that's a general partnership. Melanie fails to respond to a lawsuit against a client in time, and the client is found liable on a $1 million verdict. The client files a lawsuit suit against Melanie and Clay. Which of the following statements about this set of facts is true?

A. Only Melanie can be held liable because Clay wasn't involved with the case.

B. Only Melanie can be held liable because she committed the wrong.

C. Only the partnership can be held liable; Melanie and Clay aren't personally liable.

D. Either Melanie or Clay may be held jointly and severally liable.

2. Adam is president of Well, Inc. The board of directors instructs Bob not to borrow any money on behalf of the corporation. Bob does so anyway, and the corporation lacks income and assets to pay the debt. Bob will be personally liable for the debt under the

A. fairness rule.

B. actual authority rule.

C. business judgment rule.

D. corporate opportunity doctrine.

3. Crawford, Inc., would like to own some land owned by Toxic Waste, Inc., to build a storage warehouse for inventory. However, Crawford doesn't want to be responsible for the liabilities of Toxic Waste. The best method of accomplishing Crawford's goals is

A. stock acquisition.

B. consolidation.

C. asset acquisition.

D. merger.

4. If a regulation affecting corporations is federal, the authority for that regulation likely derives from

A. police power.

B. executive orders.

C. the Commerce Clause.

D. the Supremacy Clause.

5. Under the Revised Uniform Partnership Act,

A. the partnership is an aggregate rather than an entity in its own right.

B. partners don't have transferable economic interests.

C. partnership property is owned by the partnership.

D. partners are co-owners of partnership property.

6. Brenda is on the board of directors for Money Company. Brenda rarely attends board meetings and doesn't pay attention when she does attend. Brenda usually votes like her friend Sadie, who is also on the board. Brenda voted for some proposals that harmed the company. Brenda likely violated

A. her duty of obedience.

B. the fairness rule.

C. the actual authority rule.

D. her duty of due diligence.

7. Ken is the president of a large energy company. Company executives approached Ken about purchasing some smaller companies to expand the business. Ken read the reports explaining the potential risk and return of the investment, and he decided the purchase appeared to be a good investment. Unfortunately, Ken was wrong, and the purchase caused the company to lose millions of dollars. Based on these facts, Ken

A. should benefit from the business judgment rule.

B. violated his duty of loyalty to the corporation.

C. violated his duty of due diligence to the corporation.

D. should benefit from the fairness rule.

8. An advantage of an S corporation is that shareholders can avoid

A. estoppel.

B. double taxation.

C. bylaws.

D. insider trading.

9. Steve decides to incorporate his business, but he thinks it's too expensive to hire an attorney to advise him of the requirements. Steve merely changes the name on the sign outside from Steve's to Steve, Inc. One of Steve's customers brings suit against Steve, Inc., based on an allegedly defective product sold through his business. Steve defends on the basis that Steve, Inc., doesn't exist. Which of the following statements about this set of facts is true?

A. Steve is wrong; a de facto corporation exists.

B. Steve is wrong; a de jure corporation exists.

C. Steve is wrong; a corporation by estoppel exists.

D. Steve is correct; no corporation exists.

10. Jennie owns shares in Superstore, Inc. A vote about whether Superstore should expand its operations to China is coming up. Jennie thinks this is a good idea, but she doesn't own enough shares to control the outcome of the vote. Jennie could increase the chance that the vote will go her way by

A. entering into a pooling agreement.

B. offering to give someone else a proxy.

C. filing a derivative suit.

D. making a shareholder proposal.

11. Sidney and Nikki are law partners in a general partnership. Nikki decides to take a position at another law firm. Nikki notifies Sidney that she's leaving the partnership. This set of facts constitutes a dissociation and dissolution by

A. act of a partner.

B. consent.

C. operation of law.

D. judicial decree.

12. Sal is a shareholder in XYZ Corporation. XYZ Corporation made defective products, and many individuals have filed lawsuits due to the defects. As a shareholder, Sal may

A. be held personally liable only if the corporation was aware of the defects.

B. be held personally liable for the defects.

C. not be held personally liable for the defects.

D. be held personally liable only if the plaintiffs name Sal as a defendant.

13. Herbie owns a pizza parlor in New York. Herbie didn't file any documents to create the business entity, he makes all the business decisions, and he retains all profit after overhead is paid. Herbie owns a

A. corporation

B. limited liability company.

C. partnership.

D. sole proprietorship.

14. Stuart and Cole enter a business venture in which they both agree to contribute funds, money, and time to a sporting goods store. Furthermore, the two agree to equally split all profits. Stuart and Cole have entered into a

A. limited liability company.

B. sole proprietorship.

C. partnership.

D. corporation.

15. Tom is president of Big Drug, Inc. Tom receives a phone call from a federal agency informing him that a new drug owned by Big Drug will be approved for sale to the public. Tom knows that this drug will be very popular and will cause a significant increase in the company's profits. Tom quickly purchases as much Big Drug stock as he can afford. Then, when the federal agency formally announces approval of the drug, Big Drug stock triples in value, and Tom becomes rich. Tom has violated the

A. business judgment rule.

B. insider trading rule.

C. corporate opportunity doctrine.

D. fairness rule.

16. Robert owns shares in Products, Inc., and suspects that Zach, one of the directors of the company, has been stealing corporate assets. Robert complains to the corporation, but no action is taken. Robert should file a

A. direct suit against Products, Inc.

End of exam

B. derivative suit against Zach on behalf of Products, Inc.

C. derivative suit against Products, Inc., on his own behalf.

D. direct suit against Zach.

17. Which of the following types of company offers protection for personal liability?

A. Sole proprietorship

B. Limited liability partnership

C. General partnership

D. Term partnership

18. The difference between a limited partnership and a registered limited liability partnership (RLLP) is that

A. all partners have limited liability in a limited partnership, but not in an RLLP.

B. a limited partnership can have secret partners, while an RLLP can't.

C. all partners have limited liability in an RLLP, but not in a limited partnership.

D. an RLLP can have secret partners, while a limited partnership can't.

19. Bob is the CEO of Realty, Inc., a company that purchases and develops property for shopping centers. Bob learns that certain real estate, which would be excellent for a shopping center, is about to go up for sale. Bob purchases the property himself without telling anyone at the corporation. Bob has violated the

A. corporate opportunity doctrine.

B. insider trading rule.

C. fairness rule.

D. business judgment rule.

20. Crawford, Inc., wants to acquire the assets of Toxic Waste, Inc., but Toxic Waste won't sell. Toxic Waste is a publicly held company with widely dispersed share ownership. What technique can Crawford use to accomplish its goal?

A. Takeover bid

B. Merger

C. Consolidation

D. Asset acquisition

 

                      

060468RR Law and the Judicial System

060468RR Law and the Judicial System

Questions 1 to 20: Select the best answer to each question. Note that a question and its answers may be split across a page break, so be sure that you have seen the entire question and all the answers before choosing an answer.

1. Lynn's attorney advises Lynn to resolve a case using med-arb. If Lynn and the defendant agree to use med-arb, this means

A. the case involves medical malpractice.

B. all issues will be decided by an arbitrator.

C. the case won't have an outcome unless Lynn and the defendant both agree.

D. Lynn is risking that some issues in the case will be decided by an arbitrator.

2. An advantage of ADR is that it

A. saves time and money.

B. improves the discovery process.

C. promotes the development of the law.

D. effectively handles constitutional law.

3. Which type of ADR involves time limits on presentations?

A. Early neutral evaluation

B. Summary jury trials

C. Med-arb

D. Mediation

4. Rosa sues her neighbor. Rosa's lawyer relies on persuasive precedent. Which of the following statements is true?

A. The court must overturn the precedent because it's not binding.

B. The court is free to follow or ignore the persuasive precedent.

C. The court should disregard the precedent unless it's from a U.S. Supreme Court case.

D. The court must follow the precedent because it's binding.

5. Phillip and Lori have a two-car accident in Tennessee. Both of them reside in Tennessee. Phillip will be able to sue Lori in Tennessee federal court

A. if his damages are extraordinary.

B. under no circumstances.

C. if his damages exceed $75,000.

D. if the case involves application of federal law.

6. Rights of citizens are most likely to be found in which provisions of the U.S. Constitution?

A. Article 3

B. Article 1

C. The amendments

D. Article 6

7. Big Factory, Inc., and Save the Environment, an environmental group, have a dispute over whether making Big Factory, Inc., use certain expensive antipollution devices would contribute significantly to improving air quality. A type of ADR especially suited to this dispute is

A. summary jury trial.

B. private civil trial.

C. science court.

D. partnering.

8. Donovan, like thousands of other people, was injured by an over-the-counter cold medicine that caused his hair to fall out. Even though his hair has grown back, he wants to sue. His lawyer advises that doing so would be expensive and not cost-effective, given the small amount of damage that temporary hair loss caused Donovan and other people like him. Donovan and others in his situation can make a lawsuit cost effective by filing

A. a class action lawsuit.

B. a small-claims lawsuit.

C. in federal court.

D. in state court.

9. Carl was arrested under a New Jersey statute that made it a crime to be persistently unemployed. Carl argues that a similar statute was declared unconstitutional by the California state court, so the New Jersey state court is required to declare New Jersey's statute unconstitutional. Carl is wrong because

A. only federal courts can create binding precedent.

B. out-of-state cases aren't binding precedent in state courts.

C. more than one court has to rule a certain way before precedent is established.

D. state courts aren't bound by precedent.

10. Paula's lawyer originally filed in suit in Florida state court. Stephanie, the defendant, would prefer that the case be heard in federal court. To have the case heard in federal court, Stephanie must prove federal subject matter jurisdiction and file a

A. writ of certiorari.

B. motion to remove.

C. summary judgment motion.

D. motion of demurrer.

11. David was filing his income tax return when he learned that the IRS now requires taxpayers to file several new forms. David believes that the IRS can't require him to file these forms and that only Congress can do that. Which of the following is true?

A. David doesn't have to file the forms unless Congress approves them.

B. David has to file the forms because only agencies have the power to adopt statutes.

C. David doesn't have to file the forms because agencies have the power to adopt only nonbinding regulations.

D. David has to file the forms because agencies have the power to adopt binding regulations.

12. Doug's complaint asks for an injunction. Which of the following is true?

A. Doug seeks money damages.

B. Doug seeks an equitable remedy.

C. Doug has suffered great harm.

D. Money would be an adequate remedy.

13. The National Conference of Commissioners on Uniform State Laws developed a revised version of the UCC. Joe learned of this and, relying on one of the changes, acted in a way that was prohibited under the former version but permitted under the revised version. As a result, Joe was sued for his action. Both parties live in Joe's state, which is also where the transaction took place. Whether Joe wins or loses depends on

A. whether members of the commission that drafted the revision were from Joe's state.

B. which version of the UCC has been adopted by the legislature in Joe's state.

C. which party stands to gain the most from the lawsuit.

D. which version of the UCC the judge thinks is most equitable.

14. The police catch Matthew in the act of committing a crime. The likely order of the stages of Matthew's criminal case is

A. arrest, formal charge, arraignment, preliminary hearing, and trial.

B. arraignment, formal charge, arrest, preliminary hearing, and trial.

C. arrest, preliminary hearing, formal charge, arraignment, and trial.

D. arrest, arraignment, formal charge, preliminary hearing, and trial.

15. Gary sues Dennis, relying on a state law. Dennis defends himself based on a federal law involving the same subject. If Dennis wins, it will be because of

A. preemption.

B. judicial review.

C. the federal register.

D. devolution.

16. State law prohibited public criticism of state officials. Kelly criticized the officials and was arrested. She argued that the law conflicted with the U.S. Constitution. The government argued that the law didn't conflict with the state constitution. The court agreed with both positions. Which of the following is true?

A. The law will be held invalid because of the Commerce Clause.

B. The law will be upheld because it's a state law and is consistent with the state constitution.

C. The law will be held invalid because the U.S. Constitution is the supreme law of the land.

D. The law will be held invalid because a law is invalid if it conflicts with any state constitution.

17. April's attorney informs her that they've been served with interrogatories. Which of the following is true?

A. April will have to answer questions under oath about the case.

B. April will be required to make oral statements in front of a court stenographer.

C. April's attorney will have to answer questions under oath about the case.

D. April will be required to submit to a physical examination.

18. John sues Sally under a statute that has ambiguous language. Which of the following is true?

A. John will have to find a different legal basis for his claim.

B. The statute is invalid because of the ambiguous language.

C. The court will interpret the statute to resolve the ambiguity.

D. A legislative body will have to clarify the statute before the court can apply it to John's case.

19. Miguel, an Idaho resident, sues Kurt, an Alabama resident, in Idaho state court. Miguel's lawyer warns Miguel that the Idaho court may be unable to exercise authority over Kurt. This suggests that there may be

a problem obtaining __________ jurisdiction.

A. general

B. original

C. subject matter

D. personal

20. George and Tanya are in a legal dispute. However, they're friends, and they would like to control the outcome of the case rather than letting a judge or other third-party decide it. What is their best ADR option?

A. Private civil trial

B. ADR contract clause

C. Binding arbitration

D. Mediation

 

Activity 4-10, 5-13, 6-16 Discussion Questions 5_11, 5-12 ,6-14,6-15

Title	Activity 4_10

Instructions

Activity Instructions: New Employee Orientation

Training Magazine reports that only 4% of the companies they surveyed do not provide new employee orientations. This activity deals with orientation and is comprised of two (2) parts. (100 points) (A 4-page response is required for the combination of Parts A and B.)

Part A	Through research, identify five (5) companies that provide new hire orientations and write a report that describes what each of the five (5) companies covers in its orientation.  At least one (1) of the five (5) companies should be one that you research through a telephone interview, research through a personal visit, or know from personal experience.  This report should include objectives, schedules/outlines, etc., to convey what these organizations stress in new employee orientations.  In addition, include noted "best practices" activities that personally impress you.  (55 points)
Part B	Create a training program identifying the main topics that you think should be covered in a new employee orientation for an existing or imaginary company.  Be specific.  Your training program should include an outline of topics, schedule, five (5) course learning objectives, and what you consider the best delivery method.  (45 points)

 

Title

Discussion Question 5_11

Instructions

.

Discuss the following:

Explain the following third-party interventions: mediation, fact-finder, and binding arbitration. Provide hypothetical examples of each.

Compare four (4) tactics that a union might use to break an impasse. Do not discuss the three (3) interventions discussed in "a" above.

 

 

Title

Discussion Question 5_12

Instructions

You are an employee relations manager. Your last employee values and behaviors survey showed low ratings in the following three (3) areas:

A casual regard for company property and minor theft

Among the salesforce, a lack of concern for and failure to apply ethical principles when dealing with clients

A lack of familiarity with company ethics policy.

Respond to the following. (25 points) (A 1½-page response is required.)

Access the Ashworth online library, ProQuest, and come up with three (3) creative initiatives to improve employee commitment to ethics in the workplace.

Discuss three (3) methods to communicate your initiatives to employees. This item is "out of scope" for current budget, so you cannot use means beyond normal communication tools (weekly newsletter, etc.).

 

 

 

 

Title

Activity 5_13

Instructions

Activity Instructions: Employee Performance Appraisal Guidelines (100 points)

Your company has just decided to implement annual employee performance appraisals. This is a new process for all levels of employees and management feels there may be reluctance or hesitation to put much effort into this process. Your task is to create a PowerPoint presentation for those persons who will be administering the performance appraisals.

The following content should be present in the PowerPoint presentation.

A discussion of four (4) common dangers in filling out rating-scale appraisals.

Five (5) recommendations on how to avoid appraisal problems.

Four (4) tips/techniques for delivering an employee performance appraisal, such as making some suggestions about how to have a performance appraisal meeting or interview with an employee.

In addition, the presentation should be interesting to the viewers, providing a pleasant viewing experience.

 (100 points) (A 10-slide PowerPoint presentation is required.)

 

 

 

Title

Discussion Question 6_14

Instructions

Discuss three (3) reasons why international business efforts fail. Then discuss the five (5) factors important in the selection of management staff for international assignments. Include coverage of three (3) components for each factor.

 

 

 

Title

Discussion Question 6_15

Instructions

Describe the 4-Level training and development strategy to support expatriates in a start-up company that plans to sell American wine in France. (24 points) (A 1½-page response is required.)

 

 

 

Title

Activity 6_16

Instructions

Activity Instructions: Outsourcing Case Study

 (100 points) (A 4-page response is required.)

Part A	You are the director of HR for a company that sells an upscale line of gourmet snack foods.  Your company has a 30-employee call center that takes calls from customers about order and payment issues.  Your boss talked to someone on the plane during a recent business trip and has become interested in outsourcing the call center to an off-shore firm in India.  "We could save 80% on labor alone!" he exclaimed. You have heard that about half of outsourcing off-shore work is terminated fairly quickly.  Write a paper outlining the pros and cons of off-shore outsourcing in this situation.  Present at least three (3) positive and three (3) negative sides of the issue.  In true, objective fashion, present the facts, but let your boss make up his own mind.  (60 points)
Part B	Discuss an example of one (1) company that is successfully outsourcing work offshore and one (1) company that tried outsourcing offshore but terminated the effort.  (40 points)

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