Corporate Governance and Law
Exam Answer Key
Course Introduction
Corporate Governance and Law examines the frameworks, principles, and legal regulations that shape the management and oversight of corporations. The course explores the roles, responsibilities, and interactions of key stakeholders such as shareholders, boards of directors, and executive management in promoting ethical conduct and accountability. Students analyze key legislative acts, case law, and best practices governing issues such as board structure, executive remuneration, risk management, shareholder rights, and corporate social responsibility. The interplay between global standards and local regulations, as well as contemporary challenges and reforms in corporate governance, are also discussed, equipping students with the knowledge to critically evaluate and influence governance practices in diverse business environments.
Recommended Textbook
The Legal Environment of Business 11th Edition by Roger E. Meiners
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22 Chapters
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Page 2
Chapter 1: Todays Business Environment: Law and Ethics
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Sample Questions
Q1) The judiciary:
A)applies the common law
B)writes laws
C)is not involved with the common law
D)is controlled by voters through referendums
E)none of the other choices
Answer: A
Q2) The U.S.Constitution creates:
A)the rights of citizens
B)stare decisis
C)the executive branch of government
D)informal law
E)none of the other choices are in the Constitution
Answer: C
Q3) Surveys indicate that the public has less confidence in the ethical standards of business leaders today than it did decades ago.
A)True
B)False
Answer: True
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Page 3
Chapter 2: The Court Systems
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Sample Questions
Q1) An Idaho resident bought a large quantity of jeans over the Internet from a Maine company.When a dispute over the quality of the product arose,the Idaho resident sued the Maine company in Idaho state court.When the Maine company protested,the supreme court of Idaho,in Blimka v.My Web Wholesalers,held that the buyer:
A)could sue in either state court in Idaho or Maine
B)could sue in either federal court in Idaho or Maine
C)could sue in either federal or state court in Idaho
D)could sue in either federal or state court in Maine
E)none of the other choices are correct
Answer: E
Q2) Although it has nationwide jurisdiction,the Court of Appeals for the Federal Circuit primarily hears appeals from the district courts involving:
A)tax,tort and bankruptcy cases
B)patent,trademark and copyright cases
C)criminal cases
D)all of the other specific choices are correct
E)none of the other specific choices are correct
Answer: B
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Page 4
Chapter 3: Trials and Resolving Disputes
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Sample Questions
Q1) Before the case goes to the jury,the attorneys of both parties present:
A)the voir dire
B)the summary discussion
C)the hearsay evidence
D)the rebuttal evidence
E)none of the other choices are correct
Answer: E
Q2) What is the general rule concerning what is said during a mediation and a later court proceeding?
A)mediators must always testify about what they know
B)mediators will often,but not always,have to testify
C)mediators cannot be required to testify
D)mediators may never testify
E)none of the other choices is the correct rule as stated by the Colorado Supreme Court Answer: C
Q3) The Constitution guarantees the right to use a jury in all civil penalty cases. A)True
B)False
Answer: False
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Page 5
Chapter 4: The Constitution: Focus on Application to Business
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Sample Questions
Q1) A restriction on advertising for a lawyer's services is an example of:
A)a violation of a Fifth Amendment right
B)a violation of a First Amendment right
C)a constitutional privilege
D)a judicial restriction on legal professionals
E)none of the other choices are correct
Q2) Before being controversially struck down by the Supreme Court in the Citizens United case,the McCain-Feingold Act:
A)allowed political speech by all non-profit corporations
B)prohibited for-profit and non-profit corporations and unions from broadcasting "electioneering communication"
C)promoted "electioneering communication" by political parties
D)prohibited for-profit,but not non-profit,corporations and unions from broadcasting "electioneering communication"
E)none of the other choices are correct
Q3) States may impose sales taxes on items shipped to state residents from out-of-state mail order businesses.
A)True
B)False
Page 6
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Chapter 5: Criminal Law and Business
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Sample Questions
Q1) When a insurance policy holder lies about the condition of their property to get lower rates it is an example of:
A)insurance fraud
B)banking fraud
C)embezzlement
D)money fraud
E)money laundering
Q2) In U.S.v.Young,where government agents took x-rays of packages shipped by Young via Federal Express,but no warrant had been issued,the appeals court held that the evidence gathered from the x-rays could not be used in court.
A)True
B)False
Q3) Which of the following is an example of a white-collar crime:
A)embezzlement
B)bribery
C)fraud
D)violation of securities law
E)all of the other specific choices are correct
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Chapter 6: Elements of Torts
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Sample Questions
Q1) Tort law does NOT:
A)impose criminal penalties on the negligent
B)ensure the effective operation of the Due Process Clause
C)replace the insurance industry
D)ensure Equal Protection of the 14 Amendment is operational
E)all of the above choices
Q2) Mary is running for the School Board.Joe tells people that Mary was convicted of prostitution several times.This is true,but the revelation is distressing to Mary who is now successful in business and has put her past behind her.Most likely,Mary will:
A)win a libel suit against Joe
B)win a slander suit against Joe
C)win a false imprisonment suit against Joe
D)win a defamation suit against Joe
E)lose a suit for a,b,c,or d against Joe
Q3) In Forgie-Buccioni v.Hannaford Brothers,where Forgie-Buccioni was detained in a grocery store's security room after being accused of not paying for cold medicine,the appeals court held that false imprisonment did occur.
A)True
B)False
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Page 8
Chapter 7: Business Torts and Product Liability
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Sample Questions
Q1) In MacPherson v.Buick,where the wheel on a new Buick collapsed,causing the car to crash,injuring MacPherson,the court of appeals held MacPherson could sue Buick because:
A)Buick was a manufacturer of automobiles and responsible for the finished product
B)Buick was a wealthy enough company to afford paying damages
C)Buick was liable because it advertised that the wheels were safe on every vehicle
D)MacPherson's injuries were life-threatening
E)none of the other choices are correct
Q2) Unknown hazards products liability cases involve:
A)a small number of products liability cases
B)only cases involving asbestos
C)the largest dollar volume of products liability cases
D)cases in which the government is the defendant
E)cases in which the government is the plaintiff
Q3) The Restatement (Third)of Torts on product defect recommends that courts use a cost-benefit test to see if added safety is worthwhile.
A)True
B)False
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9
Chapter 8: Real and Personal Property
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Sample Questions
Q1) If you own a piece of land free and clear (in fee simple),you have absolute and unlimited rights to use that land.
A)True
B)False
Q2) Your neighbor deals drugs out of his house.You may have a good suit for nuisance against him.
A)True
B)False
Q3) Anna transfers,to her mother Mildred,the right to use Anna's second home so long as Mildred is alive.This is known as:
A)a fee simple
B)a fee absolute
C)a life estate
D)a tenancy
E)a lease
Q4) A warranty deed promises good title to land being passed to another.
A)True
B)False
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Page 10
Chapter 9: Intellectual Property
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Sample Questions
Q1) Which of the following is a drawback to patents:
A)the application process is easy
B)the application process is cheap
C)the application process is not time-consuming
D)the application process is technical
E)all of the other specific choices are correct
Q2) Cybersquatting is restricted by:
A)the Bill of Rights
B)the Antiwebsquatting Consumer Protection Act
C)the Sherman Act
D)the Lanham Act
E)none of the other choices are correct
Q3) The term of copyright protection is:
A)10 years
B)17 years
C)the life of the author
D)the life of the author plus 21 years
E)95 years for a work for hire
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11
Chapter 10: Contracts
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Sample Questions
Q1) Modern definitions of contracts center on:
A)lex mercatoria
B)commercial rules
C)evidence of seals
D)duties imposed by the International Convention on Contracts
E)none of the other choices
Q2) The doctrine of ____________ is used to end the obligations to a contract when an event occurs that makes performance impossible.
A)changed circumstances
B)discharge due to infeasibility
C)legal incompatibility
D)legal infeasibility
E)none of the other choices are correct
Q3) Generally,minors and intoxicated persons have only partial capacity to contract.
A)True
B)False
Q4) If someone decides to accept less than full payment to settle a debt,there is an accord and satisfaction.
A)True
B)False
Page 12
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Chapter 11: Domestic and International Sales
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Sample Questions
Q1) Under the UCC,for good to be merchantable means that they must be "of exceptional quality expected of an expert."
A)True
B)False
Q2) _____________ means that the good "must be of a quality comparable to that generally acceptable in that line or trade."
A)Warrantable
B)Profitable
C)Acceptable
D)Marketable
E)none of the other choices are correct
Q3) By definition,a sale under Article 2 of the UCC requires that:
A)both parties involved be merchants
B)contracts be for goods or services;that the sale be between merchants;and that the sale take place in the normal course of commerce
C)the product or service (good)be classified as a bailment
D)title to the goods pass from the seller to the buyer and that a price be paid for the good
E)all of the other choices
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Chapter 12: Negotiable Instruments, credit, and Bankruptcy
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Sample Questions
Q1) If a debtor cannot meet credit obligations it is said:
A)to relapse
B)to expire
C)to default
D)to attach
E)to perfect its claim
Q2) A sight draft is:
A)also known as a trade acceptance agreement
B)also known as a sales draft
C)also known as a time draft
D)also known as an account receivable
E)none of the other choices
Q3) Brandon files for a Chapter 11 bankruptcy on behalf of his company,Brandon's B-B-Q.The company is allowed to continue its operations.During this period Brandon is:
A)the official in possession
B)the guarantor in extremis
C)a creditor
D)a and b
E)none of the other choices are correct
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Page 14
Chapter 13: Business Organizations
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Sample
Questions
Q1) At a shareholder meeting,important corporate business is presented to the shareholders in the form of ___________,which shareholders vote to approve or disapprove.
A)statements
B)resolutions
C)quorums
D)bylaws
E)contracts
Q2) If a corporation is dissolved voluntarily,there must be a "winding up" of its affairs.
A)True
B)False
Q3) The disclosure document that franchisors must give to prospective franchise buyers is not required to include which of the following information?
A)an audited financial statement of the franchisor
B)the background and experience of the key executives
C)the names,addresses,and phone numbers of other franchisees
D)list of responsibilities of the franchisor and the franchisee once the deal is made
E)all of the other choices must be provided
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15
Chapter 14: Agency and the Employment Relationship
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Sample Questions
Q1) An agent is expected to perform responsibilities with the degree of care that is called ordinary care under the circumstances.
A)True
B)False
Q2) If a contractor does not have authority to enter into contracts for the principal then:
A)he is not an agent
B)he is also an agent
C)he is also an agent if he thinks he has the authority to enter into contracts
D)he is still considered an agent in most,but not all,states
E)none of the other choices are correct
Q3) Which of the following is a common problem with employee handbooks:
A)making promises about discipline procedures that are not followed consistently
B)failing to change the handbook to comply with state and federal laws as they change
C)creating probationary periods that imply permanent status once probation has ended
D)all of the other specific choices are correct
E)none of the other specific choices are correct
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Chapter 15: The Regulatory Process
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Sample Questions
Q1) Conducting an on-the-spot worksite safety inspection by OSHA inspectors is an example of acquiring information by:
A)indirect observation
B)direct observation
C)power of subpoena
D)direct enforcement
E)obvious observation
Q2) Procedural rules issued by administrative agencies are:
A)statements that provide the agency staff and public with guidance regarding what the agency believes a certain statute or regulation means
B)administrative statutes with the same force of law as statutes passed by Congress
C)a statement of what companies must do to follow the requirements of regulations
D)statements that may only rephrase the language of a statute passed by Congress
E)none of the other choices
Q3) A key source of administrative law is the Government in the Sunshine Act.
A)True
B)False
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Chapter 16: Employment and Labor Regulations
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Sample Questions
Q1) To promote productive collective bargaining,Congress provided for certain activities to be protected under the National Labor Relations Act.Protected activities are:
A)covered activities
B)compromise activities
C)cautionary activities
D)concerted activities
E)creative activities
Q2) Although employers may refuse to allow an OSHA inspector in without a warrant:
A)this is rarely done in practice because it is likely to put the inspector in a bad mood
B)this is often done to annoy the inspector
C)this is rarely done in practice because most employers like being inspected
D)this is rarely done in practice because the employer must pay for the warrant
E)none of the other choices are correct
Q3) In right-to-work states,only the workers who vote to be represented by a union are covered by the collective bargaining agreement between the employer and the union.
A)True
B)False
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Chapter 17: Employment Discrimination
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Sample Questions
Q1) Under Title VII,race includes white,black,Hispanic,Asian and American Indians.
A)True
B)False
Q2) Title VII of the Civil Rights Act does not apply to which of the following:
A)selection of independent contractors
B)employment agencies
C)labor unions in the private sector
D)law firms
E)Title VII applies to all of the other specific choices
Q3) The preferential treatment of members of protected classes is:
A)guilt-driven discrimination
B)irrational discrimination
C)legal discrimination
D)equalizing discrimination
E)none of the other choices are correct
Q4) The Age Discrimination in Employment Act provides weaker protections and remedies for people discriminated against in employment on the basis of age,than are provided to the classes protected under Title VII.
A)True
B)False
Page 19
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Chapter 18: Environmental Law
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Sample Questions
Q1) Under the Toxic Substances Control Act,the EPA keeps track of:
A)more than 100,000 registered chemicals
B)more than 1 million registered chemicals
C)more than 83,000 registered chemicals
D)6 major polluting chemicals
E)the 3 most toxic chemicals known to man
Q2) Which of the following is a major pollutant regulated by the Clean Air Act:
A)lead
B)nitrogen oxide
C)ozone
D)carbon monoxide
E)all of the other specific choices are major pollutants
Q3) The Clean Air Act established specific procedures for:
A)the construction of new automobile engines
B)the use of energy sources by utility companies
C)the construction of new industrial plants
D)monitoring emissions from federal government operations
E)filing public nuisance actions against large polluters
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Chapter 19: Consumer Protection
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Sample Questions
Q1) State attorneys general usually have the authority to attack deceptive business practices.
A)True
B)False
Q2) The Truth-in-Lending Act allows a creditor to avoid liability for improper disclosure if the violation is corrected within fifteen days from the time it is discovered by the creditor and before the consumer gives written notification of the error.
A)True
B)False
Q3) A consumer buys furniture.The store gives the consumer $2,000 credit to be paid back over two years.The store fails to disclose the interest rate that it charges for credit.Under the Truth-in-Lending Act,the store is wrong for not listing the interest:
A)but the customer agreed to it,so there is no violation
B)but the consumer's only recourse is to sue to cancel the contract
C)and must give the consumer the goods for free as a result
D)there is no violation because TILA does not apply to this transaction
E)none of the other choices
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Chapter 20: Antitrust Law
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Sample Questions
Q1) Which of the following organizations are at least partly exempt from the antitrust laws?
A)lobbyists
B)labor unions
C)insurance companies
D)all of the other specific choices
E)none of the other choices
Q2) The Vertical Restraint Guidelines by the Justice Department hold that tying sales are not likely to be opposed if the party using the tactic has less than a 30 percent market share for the tying product.
A)True
B)False
Q3) In U.S.v.United States Gypsum Co. ,involving the sharing of price information by members of an industry with each other,the Supreme Court held that exchanges of information are per se illegal.
A)True
B)False
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Chapter 21: Securities Regulation
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Sample Questions
Q1) The first regulation of securities in the U.S.was the:
A)Uniform Securities Act
B)Clayton Act
C)Federal Trade Commission Act
D)Interstate Commerce Act
E)none of the other choices
Q2) To be considered an accredited,investor an individual must have an annual income of at least:
A)$50,000
B)$100,000
C)$150,000
D)$200,000
E)$300,000
Q3) SEC examiners of a proposed securities offering can issue a "deficiency letter" if they believe the information in a prospectus is not complete.However,if the issuer responds in a timely manner,the SEC cannot delay the sale.
A)True
B)False
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Chapter 22: The International Legal Environment of Business
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Sample Questions
Q1) Business wanting to know the duty (tax)imposed by customs on their product should consult:
A)the Federal Register
B)the International Convention on the Sale of Goods
C)the National Brands Weekly
D)the tariff schedules
E)the Internal Revenue Code
Q2) A forum selection clause allows the parties to a contract to specify where they wish to litigate a dispute over the contract,should one arise.
A)True
B)False
Q3) The ________________ promotes uniformity in laws and discourages legal obstacles to trade.
A)World Intellectual Property Organization
B)International Monetary Fund
C)World Trade Organization
D)Commission on International Trade Law
E)World Bank
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