Corporate Governance and Ethics
Pre-Test Questions
Course Introduction
This course explores the principles and practices of corporate governance, focusing on the structures, processes, and relationships that determine how corporations are directed and controlled. Key topics include the roles and responsibilities of boards of directors, executive compensation, shareholder rights, and regulatory frameworks. Emphasis is also placed on ethical issues in corporate decision-making, examining how ethical considerations impact stakeholders and corporate strategy. Through case studies and practical examples, students will develop a critical understanding of how ethical behavior and effective governance contribute to long-term organizational success and societal trust.
Recommended Textbook
Business Its Legal Ethical and Global Environment 10th Edition by Marianne M. Jennings
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Chapter 1: Introduction to Law
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Sample Questions
Q1) If conduct is a criminal violation, it cannot also be a civil violation.
A)True
B)False
Answer: False
Q2) Which is the proper cite for Executive Orders?
A) CFR
B) USC
C) E.O.O.C.
D) none of the above
Answer: D
Q3) States do not have administrative laws.
A)True
B)False
Answer: False
Q4) Which of the following is not true regarding constitutional law?
A) exists at the state and federal levels
B) establishes government structure
C) establishes individual rights
D) can be changed by Congress
Answer: D
Page 3
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Chapter 2: Business Ethics and Social Responsibility
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Sample Questions
Q1) "If you think what we're doing now is bad, you should have seen 10 years ago at this company..." is an example of:
A) ethical analysis.
B) rationalization.
C) comparative or relative ethics.
D) both a and c
Answer: B
Q2) Which of the following statements is true about an ethical business?
A) It will always be profitable.
B) It will always satisfy all stakeholders.
C) It will always survive over the long run.
D) It will avoid the consequences of unethical behavior.
Answer: D
Q3) Warren Buffett follows the Front-Page-of-the-Newspaper test as a guide for his businesses.
A)True
B)False
Answer: True
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Chapter 3: The Judicial System
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Sample Questions
Q1) Precedent is not followed when:
A) the facts of a case can be distinguished.
B) a court believes that a change of law is socially or morally mandated.
C) technology changes.
D) all of the above
Answer: D
Q2) Stare decisis is a Latin term meaning:
A) "equitable remedy".
B) "let the decision stand".
C) "private decision".
D) "Congressional action".
Answer: B
Q3) When would a business selling merchandise over the Internet be required to defend a lawsuit in a state in which it had no offices?
Answer: Something more than Internet contact is needed to subject a cyberspace company to the jurisdiction of courts in the states where it has customers: the presence of inventory, property ownership, or the presence of salespeople would be sufficient.
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Chapter 4: Managing Disputes: Alternative Dispute
Resolution and Litigation Strategies
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Sample Questions
Q1) A motion to dismiss must be filed before an answer is filed.
A)True
B)False
Q2) Interrogatories must be answered in writing and under oath.
A)True
B)False
Q3) Which of the following may not be included in the answer to a complaint?
A) admission
B) counterclaim
C) denial
D) all can be included
Q4) Who conducts cross-examination when the defendant is presenting its case?
A) the defendant because the defendant always does cross-examination
B) the plaintiff
C) the judge because the burden of proof has shifted
D) none of the above
Q5) Devices such as a Blackberry or an iPhone are exempt under the rules for business discovery in litigation.
A)True
B)False
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Chapter 5: Business and the Constitution
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Sample Questions
Q1) The Commerce Clause was the basis for federal authority for passing and enforcing the Civil Rights Act.
A)True
B)False
Q2) Jane Stevenson was removed as head cheerleader from her high school cheer squad because she violated one of the school rules by drinking alcohol on the team bus as the team and cheer squad traveled to an away game. Jane feels she has an explanation and defense for what happened. Which of the Constitution might provide her with a review of her dismissal as head cheerleader?
A) States rights
B) Substantive due process
C) First Amendment
D) Due process
Q3) The Supreme Court uses the direct and immediate effect test in reviewing congressional regulation of interstate commerce.
A)True
B)False
Q4) Discuss the ruling and the importance of Citizen's United.
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Chapter 6: Administrative Law
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Sample Questions
Q1) Where could a business find notices of proposed rules?
A) The Code of Federal Regulations
B) The Federal Register
C) industry trade publications
D) both b and c
Q2) In some states, an appeal of an administrative agency decision requires a trial de novo.
A)True
B)False
Q3) What remedies would the U.S. Fish & Wildlife Service have available for violations of the Lacey Act?
A) Injunctions
B) Fines
C) Penalties
D) all of the above
Q4) Discuss the Administrative Procedures Act and its amendments and purpose.
Q5) The Code of Federal Regulations contains all the regulations of federal agencies.
A)True
B)False
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Chapter 7: International Law
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Sample Questions
Q1) The act of state doctrine:
A) is not recognized by the United States.
B) prohibits one government from interfering in the acts of state of another government.
C) is prohibited by members of the United Nations.
D) all of the above
Q2) Which of the following countries base their legal systems on code law?
A) Great Britain
B) Italy
C) France
D) Spain
Q3) The CISG:
A) is the contract law of the EU.
B) is part of GATT.
C) was drafted by a commission of the United Nations.
D) has been adopted in virtually every nation.
Q4) The U.S. antitrust laws apply only to U.S. firms.
A)True
B)False
Q5) Why are pirates so difficult to prosecute?
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Chapter 8: Business Crime
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Sample Questions
Q1) Which of the following is not an element of criminal fraud?
A) a false material statement
B) reliance by the buyer
C) a mistake by the seller or the intent to mislead
D) All of the above are elements.
Q2) The Sixth Amendment is the right-to-speedy trial amendment.
A)True
B)False
Q3) A willful violation of OSHA carries a possible one year prison sentence.
A)True
B)False
Q4) Plea bargaining is done only before the arraignment. A)True
B)False
Q5) Probable cause is required only for warrantless searches. A)True
B)False
Q6) Bribery is an ethical violation, but is not a crime.
A)True
B)False
Page 10
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Chapter 9: Business Torts
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Sample Questions
Q1) Defamation cannot exist in cyberspace because there is no evidence that someone heard or understood the statements.
A)True
B)False
Q2) Speeding is a breach of duty for negligence purposes.
A)True
B)False
Q3) Which of the following is not an element of negligence?
A) duty
B) breach of duty
C) reckless disregard
D) causation
Q4) In most states, letters of reference are exempt from liability for defamation.
A)True
B)False
Q5) The shopkeeper's privilege is a defense to false imprisonment if the detention is reasonable.
A)True
B)False
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Chapter 10: Cyberlaw, Social Media, and Privacy
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Sample Questions
Q1) There are state laws, but no federal laws, concerning cyberbullying.
A)True
B)False
Q2) Which of the following would be a federal crime?
A) copying FDIC data without authorization
B) changing figures on military invoices without authorization
C) placing a virus on a federal computer system
D) All of the above are federal crimes.
Q3) Under federal law, ISPs are not permitted to disclose your identity when someone asks for the actual name behind a user name.
A)True
B)False
Q4) Which of the following is correct about Lakes' policy on Tweets?
A) The monitoring is overly broad and will not be permitted under federal law.
B) The monitoring is limited to company e-mail messages, but personal email messages are discoverable.
C) The monitoring policy fits within current legal standards.
D) The monitoring is not permitted.
E) a, b, and c
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Chapter 11: Environmental Regulation and Sustainability
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Sample Questions
Q1) A nuisance must be a public nuisance to be actionable.
A)True
B)False
Q2) Which of the following actions would require the company to obtain a permit for discharge from the EPA?
A) Releasing water back into a stream after it was used in production with the only change being its temperature.
B) Releasing water back into a stream after it was used in production, but in a state cleaner than it entered the factory.
C) Releasing water into a pond on company property.
D) Releasing water from a power plant cooling tower into the ocean.
E) All of the above would require an EPA permit.
Q3) The Endangered Species Act permits those desiring to protect a species as well as landowners affected by such protection to challenge a determination of protection for a species.
A)True
B)False
Q4) Discuss the scope of the Endangered Species Act.
Q5) Discuss how EMF problems can affect property values.
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Chapter 12: Contracts and Sales: Introduction and Formation
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Sample Questions
Q1) An acceptance by a merchant in response to an offer by a merchant cannot contain any additional terms or it will be treated as a counteroffer under the UCC.
A)True
B)False
Q2) List the federal laws regulating credit contracts and give a brief description of each.
Q3) Discuss what colleges and universities must do under CARD for their students.
Q4) The Restatement of Contracts is another name for the UCC.
A)True
B)False
Q5) An offer is effectively communicated upon mailing or dispatch.
A)True
B)False
Q6) A record, such as an e-mail or fax, now satisfies the writing requirement under both the UCC and common law.
A)True
B)False
Q7) List the types of contracts required to be in writing.
Q8) Name the statutes that affect contract formation in cyberspace.
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Chapter 13: Contracts: Performance, Remedies, and Rights
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Sample Questions
Q1) A liability limitation clause is the same as an exculpatory clause.
A)True
B)False
Q2) A minor who has received medical care can never be responsible for payment for those services.
A)True
B)False
Q3) Dana Riley purchased a home in the Brentwood area of Los Angeles. After she purchased the home, she learned that the home had been the residence of a long-time drug dealer. She experienced many late-night visitors and often noticed cars parked outside near the street curb with the drivers and passengers studying the home. The former owner has been convicted of drug charges. Dana has become uncomfortable with the visitors and the surveillance. She just wants out of the house. Which of the following statements is true?
A) Dana has no grounds for rescinding her agreement.
B) The information about the drug dealer was material and should have been disclosed to her.
C) Withholding information about the former drug-dealer owner is not misrepresentation.
D) none of the above
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Chapter 14: Sales: Product Advertising and Liability
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Sample Questions
Q1) A bike purchaser who alters the frame of a bike after the purchase and who is injured because the frame cracks:
A) may not be able to recover from the manufacturer because the product was in a different condition at the time of the accident.
B) can still recover from the manufacturer because the manufacturer should know that buyers would alter their bikes.
C) can still recover, but not punitive damages.
D) both b and c
Q2) The Wheeler-Lea Act:
A) expanded the FTC's authority to regulate advertising.
B) limited the FTC's authority to regulate only ads that affected competition.
C) eliminated the FTC authority to require corrective ads.
D) none of the above
Q3) Section 402A covers:
A) manufacturers only.
B) retailers only.
C) those who sell products out of their home.
D) only merchants.
Q4) Describe three defenses to product liability.
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Chapter 15: Products: Business Intellectual Property
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Sample Questions
Q1) During the late 1980s, a number of homeowners purchased satellite dishes in order to gain access to all forms of television programming (without the additional costs of cable and cable access fees). The pay-TV channels then scrambled their signals, and the owners find that their satellite dishes offer them no more stations than regular TV. Discuss the ownership rights in this situation. Were the satellite dishes an ethical and legal issue when they were sold to the homeowners in the first place?
Q2) The Digital Millennium Copyright Act imposes liability for circumvention of encoded materials that prevent copying.
A)True
B)False
Q3) Trade dress is not entitled to protection unless there is some form of registration under federal law.
A)True
B)False
Q4) Corporations cannot hold copyrights.
A)True
B)False
Q5) Discuss the potential penalties under the Industrial Espionage Act.
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Chapter 16: Business Competition: Antitrust
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Sample Questions
Q1) Carl Wilton has just sold his Mexican restaurant to Jerry Felt. The restaurant is located in Costa Brava, a city of about 300,000 people. In their sales agreement, a clause provides that Carl will not open another restaurant in Costa Brava for a period of five years. The clause is:
A) a covenant not to compete.
B) void as against public policy.
C) prohibited under the Sherman Act.
D) none of the above
Q2) Which of the following is not an antitrust violation so long as there is sufficient interbrand competition?
A) resale price maintenance
B) sole outlets and exclusive distributorships
C) price discrimination
D) all of the above
Q3) Fair trade contracts:
A) were eliminated in 1975.
B) have been permitted in nearly one-half of the states.
C) relate to issues surrounding price discrimination.
D) none of the above
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Chapter 17: Management of Employee Conduct: Agency
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Sample Questions
Q1) The presence of a master-servant relationship determines whether or not a principal must pay wage taxes and withhold income taxes.
A)True
B)False
Q2) If the act of an agent is ratified:
A) there is retroactive authority for the act.
B) the principal has agreed to allow the agent to be liable.
C) the agent then has express authority for that act in the future.
D) none of the above
Q3) Under apparent authority:
A) a principal is never liable for the acts of an agent.
B) a principal is liable for creating the appearance of an agency relationship.
C) there is no agency relationship.
D) none of the above
Q4) There is no apparent authority in an undisclosed principal relationship.
A)True
B)False
Q5) There is no employer liability for negligent hiring.
A)True
B)False
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Chapter 18: Governance and Structure: Forms of Doing Business
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Sample Questions
Q1) Allied Van Lines has structured its company by giving its franchisees stock ownership in the company. On the stock is the following language: NOTE: Restrictions apply to ownership of this stock. Only franchisees and employees of Allied Van Lines can own this stock. In the event of a franchise or employment termination, the stock must first be offered to the Allied Board for purchase. Is the restriction valid?
Q2) Oil company executives are the highest paid CEOs annually.
A)True
B)False
Q3) Corporations pay double taxes, on income and shareholders on dividends.
A)True
B)False
Q4) In which of the following forms of doing business does the death of one of the owners cause dissolution?
A) partnership
B) S Corporation
C) C Corporation
D) closely-held corporation
E) nonprofit corporation
Chapter 19: Governance and Regulation: Securities Law
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Sample Questions
Q1) Which of the following events would be material for purposes of 10b and disclosure?
A) a pending merger
B) not meeting quarterly earnings expectations
C) product liability lawsuit
D) a and c only
E) all of the above
Q2) Under Sarbanes-Oxley, every board audit committee must have at least one financial expert.
A)True
B)False
Q3) Pump and dump is the act of hyping a stock in order to benefit from a sale once the hype affects the price.
A)True
B)False
Q4) Laddering is a safe-harbor section of the 1934 Act.
A)True
B)False
Q5) Describe who must file 10K, 10Q and 8K reports.
Q6) Discuss why Bernie Madoff received the sentence he did for his crimes.
Page 21
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Chapter 20: Management: Employee Welfare
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Sample Questions
Q1) The National Labor Relations Act:
A) is also known as the Wagner Act.
B) is also known as the Landrum-Griffin Act.
C) gives management a bill of rights.
D) none of the above
Q2) Featherbedding is payment for work not actually performed and is an unfair labor practice.
A)True
B)False
Q3) The I-9 is the form employers must have for non-citizen employees.
A)True
B)False
Q4) The U.S. Department of Homeland Security:
A) includes INS.
B) includes customs.
C) was created by the USA Patriot Act.
D) all of the above
Q5) Under workers' compensation systems, fault is immaterial.
A)True
B)False
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Chapter 21: Management: Employment Discrimination
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Sample Questions
Q1) The BFOQ defense to discrimination charges is very broad.
A)True
B)False
Q2) Discuss the main racial discrimination issues in the Ricci case.
Q3) Labor unions are exempt from Title VII.
A)True
B)False
Q4) The EEOC is responsible for enforcement of Title VII.
A)True
B)False
Q5) The Family Medical and Leave Act applies only to women.
A)True
B)False
Q6) Seniority and merit systems are not subject to Title VII prohibitions.
A)True
B)False
Q7) The Equal Pay Act addressed only the issue of wage discrimination. A)True
B)False
Q8) Discuss Costco's accommodation efforts in the Cloutier v. Costco case.
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