final

Question 1

Securities generally do not include any documents evidencing corporate
ownership or debt.

Answer 1

False

Question 2

The Securities and Exchange Commission (SEC) requires companies to le
certain information electronically so that it can be posted on the SEC’s
EDGAR database.

Answer 2

True

Question 3

All securities transactions must be registered with the Securities and
Exchange Commission—there are no exemptions.

Answer 3

False

Question 4

Once a registration statement has been led, a waiting period begins
while the Securities and Exchange Commission reviews the statement.

Answer 4

True

Question 5

A well-known seasoned issuer cannot le a registration statement until
after it announces a new oering.

Answer 5

False

Question 6

Securities oerings in unlimited amounts can be exempt from the
registration requirements in certain circumstances.

Answer 6

True

Question 7

Most securities can be resold without registration.

Answer 7

True

Question 8

Liability can be imposed on those who are negligent in not discovering
fraud in connection with a registration statement or prospectus.

Answer 8

True

Question 9

The Securities Exchange Act of 1934 applies to companies that have
assets in excess of $5 million and ve hundred or more employees.

Answer 9

False

Question 10

Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5
apply just to corporate “insiders.”

Answer 10

False

Question 11

The key to liability under Section 10(b) of the Securities Exchange Act of
1934 and SEC Rule 10b-5 is whether information omitted or
misrepresented in connection with the purchase or sale of a security is
material.

Answer 11

True

Question 12

Corporate “outsiders” may not be held liable for insider trading under
Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5.

Answer 12

False

Question 13

In the context of Section 16(b) of the Securities Exchange Act of 1934,
insiders include ocers, directors, and large stockholders of Section 12
corporations.

Answer 13

True

Question 14

For civil sanctions to be imposed under Section 10(b) of the Securities
Exchange Act of 1934 and SEC Rule 10b-5, the violator must not have had
an intent to defraud or knowledge of his or her misconduct.

Answer 14

False

Question 15

The Securities and Exchange Commission does not regulate the content of
proxy statements.

Answer 15

False

Question 16

Private parties can sue violators of Section 10(b) of the Securities
Exchange Act of 1934 and SEC Rule 10b-5 for rescission of a contract to
buy securities.

Answer 16

True

Question 17

Every state has it own corporate securities laws that regulate the oer
and sale of securities within its borders.

Answer 17

True

Question 18

Corporate accountability can be increased by imposing strict disclosure
requirements and harsh penalties for securities laws.

Answer 18

True

Question 19

Under the Sarbanes-Oxley Act of 2002, chief nancial ocers must certify
the accuracy of information in corporate nancial statements and reports
that are led with the Securities and Exchange Commission.

Answer 19

True

Question 20

The Securities and Exchange Commission does not enforce the antifraud
provisions of the securities laws in the online environment.

Answer 20

False

Question 21

Cotton Products Corporation is a public company whose shares are
traded in the public securities markets. With respect to nancial and other
signicant information concerning its securities, the Securities Act of 1933

Answer 21

c. requires disclosure.

Question 22

Guitar Factory Corporation les a registration statement and delivers a
prospectus to the appropriate parties. These items are intended to enable
the evaluation of certain nancial risks by

Answer 22

a. unsophisticated investors.

Question 23

Global Trade Corporation is a public company that is poised to issue
securities that do not qualify for an exemption from registration. This
means that Global Trade must

Answer 23

a. file a registration statement with the SEC.

Question 24

Household Products Corporation wants to make an oering of securities
to the pub lic. This oering is not exempt from registration under the Se -
curities Act of 1933. Before Household Products sells its securities, it must
provide in vestors with

Answer 24

a. a prospectus

Question 25

Riverwalk Restaurants Corporation is a noninvestment company that
wants to is sue stock of $3 million in a twelve-month period. Riverwalk,
with less than $20 mil lion in annual sales, qualies as a small business
issuer. Before Riverwalk sells the stock, it must provide investors with

Answer 25

. an offering circular.

Question 26

Fleet Delivery Corporation is a public company with a market
capitalization of less than $75 million. Fleet is poised to issue securities in
a transaction that, under the Securities Act of 1933, is “exempt.” This
enables Fleet to

Answer 26

. reduce the compliance costs by not requiring an auditor report.

Question 27

As part of a stock oering for Designer Studio Corporation, the rm’s
accountant Evelyn intention ally misrepresents material facts in the pro -
spectus. Flores buys the stock unaware of the misrepresentation and suf -
fers a loss. Evelyn may be subject to

Answer 27

a. a fine, imprisonment, and damages.

Question 28

Space Trips Inc. les a registration statement with the SEC before making
an oering to the general public. The registration contains false,
immaterial statements of which the investors are unaware. Space Trips is
charged with violating the Securities Act of 1933. Space Trips’s best
defense is

Answer 28

the untrue statements were not material.

Question 29

Fresh Fruit Company has assets of less than $10 million and fewer than
fty shareholders. Gourmand Pastries, Inc., has assets of more than $50
mil lion and more than ve hundred shareholders. The Securities
Exchange Act of 1934 applies to

Answer 29

Gourmand Pastries only.

Question 30

Bonds & Stocks Corporation, and its ocers, directors, and sharehold ers,
buy and sell securities. SEC Rule 10b-5 applies to the purchase or sale of

Answer 30

any security.

Question 31

To raise capital to form Business Apps Corporation with Cris, Dona sells
bonds and stock in other companies, and plans to register an initial public
o er ing under the Securities Act of 1933. SEC Rule l0b-5 covers

Answer 31

just about any form of securities

Question 32

Dhani, an accountant for Eureka! Inc. learns of undisclosed com pany plan -
s to market a new laptop. Dhani buys 1,000 shares of Eureka stock. He re -
veals the company plans to Fay, who tells Geo. Both Fay and Geo buy
100 shares. Geo knows that Fay got her informa tion from Dhani. When
Eureka! publicly an nounces its new laptop, Dhani, Fay, and Geo sell their
stock for a prot. Under the Securities Ex change Act of 1934, Fay is most
likely

Answer 32

liable for insider trading.

Question 33

Rico does not work for Street Bikes Company, but wrong fully obtains
inside information concerning the rm. Based on the in forma tion, Rico
buys and sells Street Bikes stock for personal gain. The Securities and
Exchange Commission prose cutes Rico, arguing that he is liable because
he stole in formation right fully belonging to another. This argument is

Answer 33

the misappropriation theory.

Question 34

OnSpec, Inc., and its ocers, directors, and share holders, buy and sell
securities. Section 16(b) of the Securities Exchange Act of 1934 covers
purchases and sales of securities involving

Answer 34

. short-swing profits

Question 35

Grain Mills Corporation is required to register its securities under Section
12 of the Securities Exchange Act of 1934. Section 14(a) of the act
regulates

Answer 35

the solicitation of proxies from Grain Mills’s shareholders.

Question 36

Cattle Ranch Company oers its stock for sale only in a single state. The
law in Cattle Ranch’s state is like the law in most states. Cattle Ranch’s
oer is sub ject to state securities statutes that include

Answer 36

antifraud and disclosure provisions.

Question 37

Boats & Yachts Corporation is a public company, which California
regulates and in which Dorian invests. The Sarbanes-Oxley Act of 2002
introduced direct federal corporate governance requirements to

Answer 37

public companies.

Question 38

HVAC Heating & Air Conditioning, Inc., is a public company whose shares
are traded in the public securities markets. Under the Sarbanes-Oxley Act
of 2002, to ensure that HVAC’s nancial results are accurate and timely,
the rm’s senior ocers must set up and maintain

Answer 38

internal “disclosure controls and procedures.”

Question 39

Rollo is the chief executive ocer of Specialty Magazines, Inc., which is
required to le certain nancial reports with the Securities and Exchange
Commission (SEC). Under the Sarbanes-Oxley Act of 2002, Rollo must

Answer 39

certify that the reports are complete and accurate.

Question 40

The purpose of antitrust law is to reduce competition.

Answer 40

False

Question 41

Any activity that substantially aects interstate commerce falls outside the
scope of antitrust laws.

Answer 41

False

Question 42

Market power is the ability of a rm to enter a given market.

Answer 42

False

Question 43

A price-xing agreement that is reasonable does not violate antitrust law

Answer 43

False

Question 44

A horizontal restraint is any agreement that in some way restrains
competition between rival rms competing in the same market.

Answer 44

True

Question 45

Any agreement that restricts output among competitors is a per se
violation of Section 1 of the Sherman Act.

Answer 45

True

Question 46

A concentrated industry is one in which either a single rm or a small
number of rms carry out the separate functions of the chain of
production.

Answer 46

False

Question 47

A territorial or customer restriction is currently considered a per se
violation of antitrust law.

Answer 47

False

Question 48

The possession of monopoly power is the only element needed to
establish the oense of monopolization.

Answer 48

False

Question 49

A rm may be a monopolist even though it is not the sole seller in a
market.

Answer 49

True

Question 50

The relevant product market includes only products that, although
produced by dierent rms, have identical attributes.

Answer 50

False

Question 51

Attempted monopolization is a violation of antitrust law

Answer 51

True`

Question 52

Predatory pricing is a legitimate marketing practice, not a form of
anticompetitive conduct

Answer 52

False

Question 53

A seller is prohibited from charging dierent prices to competing buyers
for identical goods or services.

Answer 53

True

Question 54

A seller is prohibited from making an exclusive-dealing contract if the
eect is to tend to create a monopoly.

Answer 54

True

Question 55

An exclusive-dealing contract is an agreement in which a seller agrees not
to sell to a buyer’s competitors.

Answer 55

False

Question 56

A horizontal merger occurs when a company at one stage of production
acquires a company at a higher or lower stage of production.

Answer 56

False

Question 57

Only the U.S. Department of Justice can prosecute violations of all of the
antitrust laws.

Answer 57

False

Question 58

A joint eort by businesspersons to obtain legislative action can be
exempt from the antitrust laws.

Answer 58

True

Question 59

U.S. antitrust laws may be applied to protect foreign consumers and
competitors from violations committed by U.S. business rms

Answer 59

True

Question 60

Congress enacts a statute to outlaw a specic type of anticompetitive
business agreement. Like other laws that regulate economic competition,
this law is referred to as

Answer 60

a. an antitrust law

Question 61

Discount Retail Corporation may be engaging in conduct that vio lates the
Sherman Act. To bring an action against the rm requires that its conduct
have a sig nicant impact on

Answer 61

a. interstate commerce.

Question 62

Soft Drink Corporation is charged with violating the Sherman Act through
conduct subject to the rule of reason. When applying the rule of reason in
this situation, a court will not consider

Answer 62

a. the eect of the agreement on international trade.

Question 63

Natural Gas, Inc., and Olio Energy Company rene and sell natural gas. To
limit the supply of natural gas on the market and thereby raise prices,
Natural Gas and Olio Energy agree to buy “excess” supplies from dealers
and “dispose” of it. The agreement between Natural Gas and Olio Energy
is

Answer 63

. a horizontal restraint.

Question 64

Natural Gas, Inc., and Olio Energy Company rene and sell natural gas. To
limit the supply of natural gas on the market and thereby raise prices,
Natural Gas and Olio Energy agree to buy “excess” supplies from dealers
and “dispose” of it. The Natural Gas and Olio Energy deal is

Answer 64

a per se violation of antitrust law.

Question 65

Fine Food Company, Gourmet Cheeses, Inc., and Healthy Eats, Inc. agree
to exchange information and share advertising. This trade association is

Answer 65

a. subject to analysis under the rule of reason.

Question 66

The Association of Organic Food Producers, which does not include all
organic farmers and ranchers, refuses to deal with any parties who do not
carry the products of its members. This group boycott is

Answer 66

a per se violation of antitrust law.

Question 67

Oce Warehouse Inc. and Paperclips Inc. are the chief competitors in
their market. They agree that Oce Warehouse will operate only east of
the Mississippi River and Paperclips will operate only west of the
waterway. Under antitrust law, this is most likely

Answer 67

a per se violation.

Question 68

Frictionless Lubricant Corporation and Grease, Inc., are the principal sup -
pliers of their product in their market. They agree that Frictionless will sell
exclusively to retailers and Grease will sell exclusively to wholesalers.
Under antitrust law, this is most likely

Answer 68

a per se violation.

Question 69

Bill’s Barber Supplies, Inc., is the major distributor of barber supplies in
the state of Colorado. Bill’s closest competitor is Dona’s Beauty Products
Company, another Colorado rm. They agree that Bill’s will distribute its
products in western Colorado and Dona’s will distribute its products in the
eastern part of the state. This is

Answer 69

a market division

Question 70

Smart Tablets, Inc., requires all distribu tors of its products to sell them at
a specied minimum price. This is a violation of antitrust law

Answer 70

if the anticompetitive effects outweigh the competitive benefits.

Question 71

Golf & Tennis LLC makes and sells golf clubs, tennis racquets, and related
sporting goods. By selling its products at prices substantially below the
normal cost of production, Golf & Tennis hopes to drive its competitors
from the market. This is

Answer 71

predatory pricing.

Question 72

A suit is led against DrillBits Corporation, alleging that the rm commit -
ted the oense of monopolization. To determine whether DrillBits has
monopoly power requires looking at

Answer 72

the relevant market

Question 73

Glassworx Corporation has exclusive control over the mar ket for its
products. Under antitrust law, this is

Answer 73

a violation if it acquired this power through “anticompetitive means.”

Question 74

Speedboat Corporation refuses to sell its products to Water World, Inc., a
recreational water products dealership. This is a violation of antitrust laws
if it

Answer 74

has an anticompetitive effect on a particular market.

Question 75

To drive its competitors out of a certain geographic segment of its market,
Fryin’ Potatoes, Inc., sets the prices of its products below cost for the
buyers in that area. This is

Answer 75

price discrimination.

Question 76

Disc & Shoe Brakes Corporation, a brake manufacturer, sells its products
to Eastside Motors, a retailer, at lower prices than it charges Fast Brake, a
com peti tive re tailer. This price discrimination is legal

Answer 76

unless its effect is to substantially lessen competition.

Question 77

City Manufacturing Corporation conditions shipments of its products to
Exurb Stores, Inc., on Exurb’s agreement not to buy products from
Regional Works Company, City’s competitor. This is

Answer 77

an exclusive-dealing contract.

Question 78

Mango Corporation believes that Melon Corporation engages in anticom -
peti tive behavior in an attempt to drive Mango and its other competitors
out of the market. Antitrust laws can be enforced against Melon by

Answer 78

Mango and Melon’s other competitors.

Question 79

Big American Oil Company joins with a foreign cartel to control the price
of oil. If the cartel has a substantial eect on U.S. commerce, a suit for
violation of U.S. antitrust laws can be brought against

Answer 79

all of the choices.

Question 80

An injured party may sue a business polluter in tort under the negligence
and strict liability theories.

Answer 80

True

Question 81

A public authority, such as a state’s attorney general, can sue to stop a
“public” nuisance.

Answer 81

True

Question 82

Businesses that engage in ultrahazardous activities are not liable for any
injuries the activities cause.

Answer 82

False

Question 83

Only the federal government may restrict emissions from motor vehicles.

Answer 83

False

Question 84

An environmental impact statement must analyze the impact on any
aected business of proposed environmental controls.

Answer 84

False

Question 85

The primary responsibility for implementing air-pollution standards
established under the Clean Air Act rests with state and local
governments.

Answer 85

False

Question 86

The Environmental Protection Agency has not concluded that greenhouse
gases, including carbon dioxide emissions, constitute a public danger.

Answer 86

False

Question 87

There is one set of ambient standards—maximum permissible levels of
certain pollutants—and the Environmental Protection Agency formulates
plans to achieve them

Answer 87

False

Question 88

Those who knowingly violate the Clean Air Act may be subject to criminal
liability.

Answer 88

True

Question 89

National Pollutant Discharge Elimination System permits can be issued
even if a discharge will violate water-quality standards.

Answer 89

False

Question 90

The National Pollutant Discharge Elimination System focuses on industrial
wastewater and storm water discharges.

Answer 90

True

Question 91

Water-quality standards are set by the Environmental Protection Agency

Answer 91

False

Question 92

National euent (pollution) standards are set by the Environmental
Protection Agency for each industry.

Answer 92

True

Question 93

The Clean Water Act permits the lling or dredging of wetlands without a
permit.

Answer 93

False

Question 94

Under the Clean Water Act, criminal penalties apply whether a violation
was intentional or unintentional.

Answer 94

False

Question 95

Public water systems operators must come as close as possible to
meeting the Environmental Protection Agency’s standards by using any
available technology that is economically and technologically feasible.

Answer 95

False

Question 96

Any oil facility that discharges oil into navigable waters or onto an
adjoining shore may be liable for cleanup costs, as well as damages.

Answer 96

True

Question 97

It is a violation of federal law to sell a pesticide or herbicide that has a
chemical strength dierent from the concentration declared on the label.

Answer 97

True

Question 98

When a release of hazardous chemicals from a site occurs, potentially
responsible parties can avoid liability through transfer of ownership.

Answer 98

False

Question 99

There are no defenses to liability under the Comprehensive

Environmental Response, Compensation, and Liability Act.

Answer 99

False

Question 100

Ultrahazard Removal & Disposal Corporation transports radioactive
materials. Vincent, an Ultrahazard employee, is diagnosed with radiation
sickness after exposure to the materials. Vincent’s suit
against Ultrahazard to recover for the injury is known as

Answer 100

a toxic tort.

Question 101

Plywood & Particleboard Mill, Inc., does not use proper lters on its
stacks, which consequently pollute the air. Quinn, a Plywood
& Particleboard employee, suers respiratory illness. To succeed in a suit
against the company on the ground of negligence, Quinn must show that
he suers from

Answer 101

Plywood & Particleboard’s failure to use reasonable care to avert harm to
Quinn

Question 102

Nashville, Tennessee, passes an ordinance to regulate waste disposal. The
disposal of waste may also be regulated by

Answer 102

a. all other levels of government.

Question 103

Clean n’ Green, Inc., operates a chain of car washes throughout the United
States. The government entity that is most likely to be involved in
regulating the chain’s environmental impact is

Answer 103

federal and state regulatory agencies.

Question 104

Energy Market Corporation wants to build a wind power plant on pri vate
land, for which a federal permit is required. For this action, an environ -
mental impact statement is

Answer 104

required.

Question 105

Ski Resorts, Inc., wants to add a new run to its facility in a national park on
federal land. For this action, an environmental impact statement is

Answer 105

. required.

Question 106

The National Park Service hires Outdoor Play, Inc., to replace outdated
playground equipment in a handful of national parks. For this action, an
environmental impact state ment is most likely

Answer 106

unnecessary because the action is not “major.”

Question 107

Loaf & Biscuit Company operates a commercial dough making and
packaging plant—a “major source”—that emits hazardous air pollutants
for which the Environmental Protection Agency has set maximum levels of
emission. The plant does not use any equipment to reduce its emissions.
Under the Clean Air Act, this is most likely

Answer 107

a violation.

Question 108

The operations of Commercial Concrete, Inc., are major sources of air
pollu tion. These operations must use

Answer 108

the maximum achievable control technology.

Question 109

Industrial Solvents, Inc., averages $15,000 prot per day before deciding
to ignore air pollution standards, after which the average is $30,000.
Industrial Solvents is subject to a ne of

Answer 109

$30,000 per day.

Question 110

Fried Food, Inc., operates a commercial frying plant, discharging pol lut -
ants into the air. Greg reports the violations to the Environmental
Protection Agency. Greg

Answer 110

d. may be paid up to $10,000

Question 111

Condos & Course Development, Inc., lls a wetlands area that it owns
without a permit from the U.S. Army Corps of Engineers. Condos
& Course Development plan to build a golf course and residences on the
site. Under the Clean Water Act, this is most likely.

Answer 111

a. a violation

Question 112

Energy Resources, Inc., operates an oil renery near Forest River, which ows
into Grove Lake. Discharging oil from the renery into the river can result
in

Answer 112

penalties and damages.

Question 113

Grease & Lubricants Inc. makes its products without required pollution
control technology, causing a discharge of oily waste into the nearby Holly
Lake. This activity can re sult in

Answer 113

a criminal fine, imprisonment, an injunction, or damages.

Question 114

County Water & Sewer operates a public water supply system. County
Water must send to every household it supplies with water an annual
statement describing.

Answer 114

the source of the water, and any contaminants and health concerns.`

Question 115

Pest Eradication, Inc., makes a pesticide with a one-in-a-million risk to
people of developing cancer from exposure. This substance must be

Answer 115

. registered before it is sold.

Question 116

HazMat Waste Corporation operates a hazardous waste storage facility.
Concerned that there may be a release of chemicals from the site, HazMat
sells the property to Investment Holdings, Inc. If there is a release, HazMat
is most likely

Answer 116

. liable.

Question 117

BioChemical Disposal Corporation operates a hazardous waste storage
facility. ChemCo Inc. buys BioChemical before it is discovered that the
rm’s disposal practices violated CERCLA. With respect to these violations,
Superfund imposes on ChemCo

Answer 117

strict liability.

Question 118

Open Pit Excavation Inc. operates a rock quarry next to Robyn’s vineyard
and winery. Robyn les a suit against Open Pit, alleging that the quarry is
a nuisance and unreasonably inter feres with Robyn’s enjoyment of her
property. The court is most likely to award Robyn an injunction -

Answer 118

if letting the pollution continue is more harmful than stopping it.

Question 119

Open Pit Excavation Inc. operates a rock quarry next to Robyn’s vineyard
and winery. Robyn les a suit against Open Pit, alleging that the quarry is
a nuisance and unreasonably inter feres with Robyn’s enjoyment of her
property. The court is most likely to award Robyn damages

Answer 119

if letting the pollution continue is less harmful than stopping it.

Question 120

The exterior boundaries of land extend down to the depth of the deepest
hole and up to the height of the tallest structure and no further.

Answer 120

False

Question 121

The rights that accompany a fee simple absolute include the right to use
the land for whatever purpose it is best suited, not necessarily for
whatever purpose the owner sees t.

Answer 121

False

Question 122

A sale of real estate is a complicated transaction that involves certain
formalities that are not required in a sale of goods.

Answer 122

True

Question 123

A quitclaim deed oers the most protection against defects in the title

Answer 123

False

Question 124

A recording statute allows deeds to be recorded to give notice to the
public.

Answer 124

True

Question 125

For a party to take by adverse possession, the party’s possession must be
peaceable, and not hostile or adverse.

Answer 125

False

Question 126

Eminent domain is the condemnation power of government to take land
for public use.

Answer 126

True

Question 127

One of the basic elements of zoning is the classication of land by
permissible use as part of a comprehensive municipal plan.

Answer 127

True

Question 128

Buck owns ve acres of land in California. On the land Buck has a house
and a toolshed. There are ten large maple trees around the house. The
real property includes

Answer 128

the land, the house, the toolshed, and the trees

Question 129

Roderick possesses ve hundred acres of forested property. Roderick has
the right to use the land, in cluding cutting its timber, for life. Roderick also
has the right to lease the land for a period not to exceed his life. This
ownership interest is

Answer 129

a life estate

Question 130

Dian and Elton buy a duplex in Fargo, North Dakota. On the death of
either owner, that owner’s interest in the duplex passes to his or her
heirs. This is

Answer 130

a tenancy in common

Question 131

Alf rents an apartment. The lease does not specify how long it will last, but
it does specify that Alf must pay rent every month. Alf’s tenancy is

Answer 131

a periodic tenancy

Question 132

Region Construction Company has a right to drive its trucks across Staple
Business, Inc.’s property, which is adjacent to Region’s oce. This right is

Answer 132

an easement

Question 133

With respect to Italo’s bottomland, Jacob has an easement, Kristin has a
prot, and Leopold has a license. A right to possess the bottomland is
owned by

Answer 133

Italo

Question 134

Mix-It Concrete Company has the right to enter Nim’s land and remove
the rock from Nim’s quarry. This is

Answer 134

a pro

Question 135

Marco conveys three acres of wetlands to Nature Preserves, Inc., with a
deed that warrants only that Marco held good title during his ownership
of the property. This deed is

Answer 135

a special warranty deed

Question 136

Like statutory law, administrative law is created by legislatures.

Answer 136

False

Question 137

Business has little incentive to try to inuence the regulatory environment
through lobbying.

Answer 137

False

Question 138

Administrative rules simply declare policy and do not aect legal rights or
obligations.

Answer 138

False

Question 139

An administrative rule may be arbitrary and capricious if the agency failed
to provide a rational explanation for its decision.

Answer 139

True

Question 140

All federal agencies must follow specic procedural requirements when
fullling their basic functions.

Answer 140

True

Question 141

Unlike statutes, administrative regulations do not have a binding eect.

Answer 141

False

Question 142

When the meaning of a statute’s language is unclear and an agency
interprets it, a court need not follow the interpretation even if it is
reasonable.

Answer 142

False

Question 143

State and federal transportation agencies may issue regulations that
conict. When a state regulation conicts with a federal regulation

Answer 143

the federal regulation takes precedence

Question 144

Persons who favor the creation of a federal biotech agency to regu late the
production of genetically modied agricultural and animal products
should con cen trate their lobbying e orts on

Answer 144

Congress

Question 145

Information Security Inc. pays income and other taxes collected by the
Internal Revenue Service (IRS). Like other federal administrative agencies,
the IRS was created by

Answer 145

Congress, through enabling legislation

Question 146

Hu, Ivan, and Juana apply to work for King Poultry Company. These
individuals’ identities and eligibility to work must be veried by

Answer 146

King Poultry

Question 147

If an employee presents false documentation of eligibility to work in the
United States, his or her employer is subject to deportation.

Answer 147

False

Question 148

Restocking Warehouse Corporation keeps a le of I-9 verications forms.
To inspect this le, the appropriate government ocer must obtain

Answer 148

none of the choices

Question 149

General Assembly Corporation, a U.S. employer, may hire Hilo, a non -
citizen, if Hilo is

Answer 149

a lawful permanent resident of the United States

Question 150

To gain authorization for hiring a foreign worker, an employer must show
that no U.S. worker is qualied, willing, and able to take the job

Answer 150

True

Question 151

To recruit employees from other countries, an employer must rst obtain
the approval of the U.S. Department of Labor

Answer 151

True

Question 152

Cloud Computing & Processing Corporation wants to hire Dhani, a
noncitizen of “extraordinary ability.” To hire Dhani, Cloud Computing must
petition

Answer 152

U.S. Citizenship and Immigration Services

Question 153

Employers and unions have a duty to bargain in good faith.

Answer 153

True

Question 154

Food Packagers Union represents the workers of Garden Variety, Inc. The
company does not require its new hires to join the union as a prerequisite
to obtaining employment. Food Packagers would like Garden Variety to
require the workers to join after a specied amount of time on the job.
This would violate

Answer 154

no federal law

Question 155

Detroit Automotive Company (DAC) agrees with its employees’ union not
to buy any nonunion-produced component parts from other rms for use
in DAC products. This is

Answer 155

a hot-cargo agreement

Question 156

Hiway Trucking Company believes that International Truckers Union (ITU)
has violated a federal labor law. The appropriate step is for Hiway to

Answer 156

file an unfair labor practice complaint with the National Labor
Relations Board

Question 157

During a dispute with Musicale Productions Inc., National Stagehands
Union asks the National Labor Relations Board (NLRB) for a ruling. The
NLRB rules against Musicale. The employer may appeal the decision to

Answer 157

the appropriate U.S. court of appeals

Question 158

For a union election to be held, at least 30 percent of the workers to be
represented must support a union or an election on unionization.

Answer 158

True

Question 159

Doctors Hospital Corporation employs seven thousand workers in seven
locations. These employees have the right to

Answer 159

organize

Question 160

Employees at Resource Industries, Inc., want to form into a single union.
To constitute an appropriate bargaining unit, a group of workers must
have

Answer 160

a mutuality of interest

Question 161

Labor law regulates the circumstances and conduct of strikes.

Answer 161

True

Question 162

An employer may not hire substitute workers to replace strikers.

Answer 162

False

Question 163

After extensive collective bargaining, Rubber Workers Union and SuperValu Tire Company cannot agree on terms. The union may

Answer 163

call a strike

Question 164

After extensive collective bargaining, Union of Warehouse Workers (UWW)
and Volatile Products Company cannot agree on terms. The employer
may

Answer 164

lock out the UWW employees

Question 165

It is not an unfair labor practice for an employer to contribute nancial or
other support to a labor organization.

Answer 165

False

Question 166

Bonner Industries, Ltd., a private company, is considering an initial public offering. If the company goes public, it will be regulated by the:

Answer 166

. SEC

Question 167

ackson owns a large apple orchard. Jackson sells buyers a standard plot of land on the orchard for a uniform price. The buyers then lease the land back to Jackson, who completely manages the apple orchards on the buyers’ behalf. Buyers then share in the profits of the apples when sold. This arrangement:

Answer 167

s an investment contract, because it satisfies the Howey test.

Question 168

Internet Analytics is a successful search-engine company that wants to become a publicly traded company. As it is an Internet-focused company, company executives want to deliver its prospectus to investors exclusively via the Internet. Internet Analytics may:

Answer 168

deliver its prospectus to investors exclusively via the Internet because it is permitted by the SEC

Question 169

Modern Investments is a small business that focuses primarily on securities trading in South America. The company wants to issue a securities offering to the public worth $500,000. Modern Investments is

Answer 169

not exempted from registration requirements under Rule 504.

Question 170

Computer Company is planning to make a private stock offering. It hopes to net $4 million from the sale of the stock. It will not advertise the offering and will cap the number of unaccredited investors at thirty-five. It will notify the SEC of the sales and will provide all investors with a prospectus. It will not, however, assess the investment knowledge of the buyers of its stock. Computer Company’s sale:

Answer 170

is exempt from the registration requirements of the Securities Act of 1933 under Rule 505.

Question 171

Susan is a potential investor in MegaCo. Susan learns of a press conference held by MegaCo in which the CEO knowingly states that there are no merger negotiations between MegaCo and another company. As a result, Susan decides not to purchase stock in MegaCo. Three weeks later, the public learns that, contrary to what the CEO stated, MegaCo was actually in merger negotiations with another company. The stock price of MegaCo rises as a result and Susan sues MegaCo for violation of SEC Rule 10b-5. Susan will likely:

Answer 171

not win because the misrepresentation did not occur in connection with a purchase or sale of stock

Question 172

Irene is a representative of Baroque Minerals, a publicly-traded mining company. Irene states publicly that it has discovered a significant deposit of a rare mineral in China, which promises to substantially increase the long-term revenue of the company. Unbeknownst to Irene, an unexpected earthquake that same day destroys the mine in China and blocks access to the rare mineral for years to come. The company’s stock drops as a result. Baroque Minerals will likely be

Answer 172

not liable under SEC Rule 10b-5, because Irene did not have a wrongful state of mind

Question 173

Jeremy is a director of Cloud Energy. He and his wife, Janice, own a large number of shares of stock in the company. Janice is an attorney in a law firm. She finds out that her firm is planning to file a class-action lawsuit against Cloud Energy. Jeremy and Janice now know that the price of the stock will drop as soon as the lawsuit hits the news. Jeremy and Janice:

Answer 173

must disclose what they know about the lawsuit if they want to sell their stock before news about the lawsuit becomes public knowledge.

Question 174

Gary is an employee of Thomaston Scientific. Gary learns that the R&D department discovered a new drug that will help treat heart disease better than similar medicines already on the market. Gary tells his friend Patrick about the discovery, discloses where the information came from and asks Patrick to keep it private. Instead, Patrick purchases stock on Thomaston Scientific and profits from the transaction. Patrick will be

Answer 174

. found liable under the Private Securities Litigation Reform Act.

Question 175

California has a state law that requires registration and disclosure requirements for securities sold within the state known as a:

Answer 175

blue sky law

Question 176

Marianne makes a false statement about the future earnings potential of her company, DexaCom. Shareholders sue Marianne for securities fraud. These shareholders can file their lawsuit pursuant to:

Answer 176

federal and state securities laws.

Question 177

The board of directors of Consolidated Freight, Inc., are concerned about the potential for financial mismanagement by executives of the firm. In order to obtain more information about the firm’s internal financial reporting processes, the board of directors would most likely rely on the:

Answer 177

audit committee.

Question 178

The chief executive officer (CEO) and chief marketing officer (CMO) of North Systems Co. filed a statement under Section 906 of the Sarbanes-Oxley Act. This statement certified that filed financial reports fully comply with SEC requirements, and that the information reported fairly represents the financial conditions and operations of the company. Regarding Section 906, the statement:

Answer 178

does not comply, because the chief financial officer (CFO) is missing from the statement.

Question 179

Acme, Inc., a publicly traded company with a market value of $50 million

Answer 179

is exempt from filing an auditor’s report on management’s assessment of internal controls.

Question 180

JR Shipment, Inc., a public company, has formed a corporate audit committee in order to monitor the financial operations of the firm. The corporate audit committee has four outside directors and three inside directors on the committee. Under Section 906 of the Sarbanes-Oxley Act, this committee:

Answer 180

is improper, because it has inside directors on the committe

Question 181

Kibble Bites and Chow Hound, two makers of dog food, agree that Kibble Bites will sell its lamb and rice dog food in New Jersey but not in Delaware, and Chow Hound will sell its lamb and rice dog food in Delaware but not in New Jersey. Their agreement is a:

Answer 181

horizontal market division.

Question 182

Taco Heaven, Burrito Joint, and Fast Fajitas are competitors in the Boston area. They have a secret agreement not to purchase any beef from Northwest Beef Growers’ Cooperative. Their agreement is:1

Answer 182

a group boycott.

Question 183

In a well-established market, ComBuilt produces the nation’s best-selling bookkeeping software. The program is far superior to all other similar programs. ComBuilt requires all its distributors and retailers to sell the program at a specified price. This is:

Answer 183

known as a price maintenance agreement and may violate Section 1 of the Sherman Act under the rule of reason test.

Question 184

Omega Sewing Machines is a nationally known manufacturer, having started in business almost fifty years ago. Omega and Betty’s Sewing Store agree that Betty will be the only dealer in her state that will sell Omega machines. This type of agreement is most likely:

Answer 184

allowed under the rule of reason.

Question 185

Amazing Bread begins selling its bread at a loss by cutting its price by more than one-half in an attempt to gain a considerable market share over its competitors. Once its competitors are out of the picture, Amazing Bread raises the price of its bread by 300%. This type of action is known as:

Answer 185

predatory pricing

Question 186

Platte River Meat Packing Company maintains a three percent share of the beef-packing industry in the United States. Last year, it launched an unsuccessful effort to harm its competitors and garner monopoly share of the beef-packing industry. Platte River’s efforts are:

Answer 186

not actionable because Platte River lacked sufficient market power to ensure a dangerous probability of success and consequent serious threat of monopolization.

Question 187

Bee Well is one of three suppliers of portable toilets located near the border between Oregon and California. All three companies operate in both states. Bee Well charges different prices to different customers depending on the distance to the locale and the number of units rented. This is:

Answer 187

not a violation of the Clayton Act because Bee Well can justify charging the different rates.

Question 188

Seth owns and runs a small shoe factory. He finds a source of leather that is perfect for the new styles he has designed. To ensure himself a steady supply of the leather, he wants to buy the leather-processing plant. Seth’s proposal is known as a:

Answer 188

vertical merger and will most likely be legal because it will not prevent competitors of either firm from competing in the market.

Question 189

Northern Manufacturers is prosecuted for antitrust violations by the Department of Justice, which wins its case. The judge agrees to impose criminal sanctions against Northern for the injuries it caused its competitor, Mini Lake, Inc. Mini Lake:

Answer 189

may recover treble damages and attorneys’ fees.

Question 190

Foreign Steel Exports, a company based in Brazil, colludes with other steel-export companies from around the world to agree on the price of steel sold in the United States, which causes the price of steel in the United States to substantially increase. This type of agreement

Answer 190

can be a violation of the Sherman Act.

Question 191

DynaCorp is in the computer software market. The company’s actions demonstrate an intent to monopolize the market. Under Section 2 of the Sherman Act, a firm’s intent to monopolize a market:

Answer 191

s an element of the violation and must be proved by the party pursuing the claim.

Question 192

Big Corp. and Giant Corp. both compete in the tire manufacturing industry. The two companies want to merge. A merger between these two companies would be called:

Answer 192

a horizontal merger.

Question 193

Organosis is a company in the healthcare industry. The company engages in trade practices that violate antitrust laws. Organosis is subject to criminal prosecution by:

Answer 193

the Department of Justice (DOJ) under the Sherman Act.

Question 194

Ballard Corporation, a U.S. company, does business overseas. In France, which is a member of the European Union (EU), Ballard Corporation works with a French competitor to divide the markets within France to maximize sales for both companies. Ballard Corporation may

Answer 194

face charges of violating both U.S. antitrust laws and EU antitrust laws.

Question 195

Kimmy owns a small scrapbooking store in her community. She sells paper, glue, and other scrapbooking items. She decides one day to lower her prices a little bit because she wants to boost sales and market share so that she can take a vacation. She currently has a 12% market share. Under the Sherman Act, this likely:

Answer 195

Is not a violation of U.S. antitrust laws.

Question 196

Sam lives in a subdivision that has deed restrictions that prevent drilling for oil and gas. This type of limitation is known as:

Answer 196

an encumbrance.

Question 197

Abigail is the owner of a tract of land, but Umberto owns the mineral and excavation rights to that land. Umberto commences excavation in order to access the valuable minerals. While digging, he causes the surface of the land to collapse. Umberto is:

Answer 197

absolutely liable for any collapse

Question 198

ara agrees to sell Butch a parcel of land. The land has a home, fifty acres of crops, and ninety acres of grassland. When Sara sells the parcel to Butch

Answer 198

the sale includes the crops unless the contract says otherwise

Question 199

Brad owns a hair salon that he is selling. In the salon are various items including lobby furniture, barber chairs, wall mirrors in front of each barber chair, razors, scissors, and handheld mirrors. When he sells the hair salon, the following are most likely to be considered fixtures:

Answer 199

the barber chairs and wall mirrors.

Question 200

Mary owns holds property in fee simple. Mary would like to lease the property to Jack, who wants to farm the land. Because Mary holds the property in fee simple, she:

Answer 200

Can lease, sell, or give the land away as she wishes.

Question 201

Teagen owns a small cottage in which Katie, her elderly aunt, lives. Teagen wants to ensure that Katie can live in the cottage for the remainder of her life, but that when Katie dies, title to the property will return to Teagen. Teagen can accomplish this objective by granting Katie a:

Answer 201

life estate.

Question 202

Jack and Jill have a tenancy in common in an apartment building. After ten years of ownership, Jill dies unexpectedly. On Jill’s death, Jill’s interest in the property will:

Answer 202

pass to Jill’s heirs.

Question 203

Marcus and Remy are owners of a condominium complex in a joint tenancy. Remy wants to leave the joint tenancy and sell his property rights to Yolanda. When Remy sells his property rights to Yolanda:

Answer 203

Yolanda’s ownership becomes a tenancy in common with Marcus.

Question 204

Steven and Andrea are married and live in San Diego, California. Shortly after the marriage, they purchase a home together. Two years later, Andrea inherits ranchland from her deceased father. In terms of ownership:

Answer 204

the home is considered to be community property, but the ranchland is not.

Question 205

Estella agrees to lease some property that she owns to the San Juan County Historical Society for a term of one year. The Historical Society’s tenancy is known as a:

Answer 205

fixed-term tenancy

Question 206

Hideki owns land with a huge number of trees on it. In order to protect the land, Hideki would like to remove some of the trees, or “thin” the property. Hideki gives permission to remove all but 250 trees to Ekaterina, who runs a business carving wood art in the next town. Ekaterina likely has:

Answer 206

a profit.

Question 207

In mid-July, the Jeffersons sell their home to the Trainers. The Jeffersons know that their oil furnace doesn’t work. The:

Answer 207

Jeffersons have a duty to disclose the problem.

Question 208

Amy and Reese are selling their home to Mitch and Kris. They sign a deed that affords the strongest covenants and provides the most protection to Mitch and Kris. This is called:

Answer 208

a warranty deed.

Question 209

Jason is the owner of a large tract of land. Jason sells the property to Bertha pursuant to a quitclaim deed. Bertha later learns that Michael has a right to extract minerals from the property. In this case, Bertha:

Answer 209

has no claim against Jason

Question 210

Kenneth finds a home in town that has been abandoned and moves into it. He fixes broken windows, paints the house, tends the yard and garden, and puts his name on the mailbox by the street. He contacts the county office and pays the small property tax each year with cash. The owner of the house has no idea that Kenneth is there and so has never given him permission to be there, nor asked him to move out. After a certain amount of time, Kenneth may become the owner of the house and land through the doctrine of:

Answer 210

adverse possession.

Question 211

The city of Orlando has offered to purchase Neil’s land to be used for the expansion of a thoroughfare through the city. Neil has rejected the city’s offer so the city will now proceed with a judicial action to take Neil’s land, known as:

Answer 211

condemnation.

Question 212

he city of Dallas has a 300-acre tract of land. There are specific rules regarding how the land may be used and developed. This type of rulemaking is called:

Answer 212

zoning.

Question 213

In a growing number of jurisdictions, when a tenant moves out of leased premises before the term of the lease expires, the landlord is required to make a reasonable attempt to lease the property to another party. Legally, this duty of landlords is called the duty:

Answer 213

to mitigate damages.

Question 214

Steve leases an apartment from Ashley. According to the lease, Ashley is required to keep all plumbing in working order. After Steve has lived in the apartment for four months, the toilet breaks. Ashley refuses to fix it and thereby makes it virtually impossible for Steve to continue to live there. The result of Ashley’s inaction is that:

Answer 214

she has constructively evicted Steve.

Question 215

AT&T wants to obtain additional rights to operate within the 700 MHz spectrum in the United States. The Federal Communications Commission (FCC) has rules and regulations that govern wireless spectrum auctions. The FCC is

Answer 215

an administrative agency.

Question 216

Congress passed the Securities Exchange Act of 1934, which created the Securities Exchange Commission. This legislation, which created an independent regulatory agency, is known as:

Answer 216

enabling legislation.

Question 217

Theo is injured at work and files a workers’ compensation claim, which is administered by the workers’ compensation agency in his state. His employer disputes the extent of Theo’s injuries. The case is heard by an administrative law judge (“ALJ”), who decides the case in the employer’s favor. Theo’s attorney tells him that the ALJ’s decision cannot be appealed to a court because:

Answer 217

he must first appeal the case to the workers’ compensation board that heads the state agency.

Question 218

The Environmental Protection Agency (EPA) passes a proposed rule change to the Clean Air Act related to the discharge of emissions by factories. The EPA’s action would be considered arbitrary and capricious for all of the following reasons except:

Answer 218

it failed to provide the required time for public comment.

Question 219

BP violated the Clean Air Act by discharging pollutants from one of its refineries and was unable to reach a settlement with the EPA regarding a violation of the law. The EPA plans to go forward with a trial on this matter, which will be heard by:

Answer 219

an administrative law judge (ALJ).

Question 220

The Food and Drug Administration (FDA) is investigating a report that Cherise Cosmetics Co. is in violation of purity and testing regulations. The FDA wants Yasmin, the lead chemist for the company, to testify at an administrative hearing. Yasmin refuses, so the FDA:

Answer 220

issues an ordinary subpoena.

Question 221

The Securities and Exchange Commission (SEC) charges the Able Baker Co. (ABC) with violating an administrative rule regarding the sale of securities. ABC did not realize that in its search for capital it became subject to securities regulations. ABC may attempt to settle the case rather than proceed to litigation because:

Answer 221

a settlement is less costly than litigation.

Question 222

UsAgainstThem, a nonprofit environmental group, is contesting the EPA’s interpretation of a rule that has allowed a refinery to offset an increase in emissions relating to one part of the refinery by reducing emissions in another part of the refinery. In challenging the EPA’s interpretation, a court will likely:

a. refer the matter to an agency subcommittee.	
b. defer to the agency’s interpretation.	
c. dismiss the suit for lack of standing.	
d. seek advice from Congress.

Answer 222

defer to the agency’s interpretation

Question 223

William wants to obtain information from the Securities and Exchange Commission (SEC) regarding the number of active cases related to insider trading. To request this information, he would need to file which of the following with the SEC:

Answer 223

a Freedom of Information Act request.

Question 224

The Environmental Protection Agency conducts meetings to discuss the possibility of creating additional regulations within the next five years. Under the Government in the Sunshine Act, the meetings:

Answer 224

may be closed to the public

Question 225

Assume that Congress passes a law establishing a new administrative agency to oversee cyberlaw issues. The agency writes rules to enable it to carry out its duties. The rules written by the agency will be known as a part of:

Answer 225

administrative law.

Question 226

Joseph is appointed to serve as an officer for a federal agency. He is appointed by the president of the United States and confirmed by the U.S. Senate. He is to serve for a six-year, fixed term and cannot be removed without cause, even if there is a change in the president. Joseph is most likely serving in:

Answer 226

an independent agency.

Question 227

The Food and Drug Administration (FDA) is an example of an executive agency. If Fred Smith is an officer in the FDA and he fails to perform his duties properly, the power to remove him lies with:

Answer 227

the president of the United States.

Question 228

The Equal Employment Opportunity Commission (EEOC) issues a statement describing how it will apply a section of the Americans with Disability Act. This statement is an example of a(n):

Answer 228

interpretive rule.

Question 229

Carla works for the EPA. Her department determines that a new rule is necessary to help protect seabirds along the California coast. Carla is in charge of the notice of the proposed rulemaking. This means she must draft a notice of the proposed rulemaking proceedings to be published in

Answer 229

the Federal Register.

Question 230

he Equal Employment Opportunity Commission (EEOC) issues a statement describing how it will apply a section of the Americans with Disability Act. After exhausting the administrative remedies, Jill files a lawsuit in federal court alleging that the EEOC incorrectly interpreted the statute. The court likely will:

Answer 230

give deference to the EEOC’s interpretation so long as it is reasonable.

Question 231

Jonah owns a food processing company. His business was recently raided by U.S. Immigration and Customs Enforcement agents based on a tip that he was employing undocumented workers. In defending against this charge, Jonah may assert any of the following except:

Answer 231

failure to maintain proper paperwork evidencing the right to work.

Question 232

Jake Williams is an Arizona state police officer. Marcy Smith is driving her car on an Arizona highway. Officer Williams pulls over Marcy because she is driving at an excessive speed. Officer Williams checks the immigration status of the driver, Marcy, and arrests her because she failed to carry required documentation. Officer Williams:

Answer 232

d. may check Marcy’s immigration status, but may not arrest Marcy because a state may not make it a crime to fail to carry documentation.

Question 233

Toffel Manufacturing has been requested by its employees’ union to bargain with it. Union representatives express interest in negotiating wages and working hours for its workers. Management at the company declines to bargain with the union because any renegotiation would increase the company’s operating costs. Toffel Manufacturing’s refusal to bargain:

Answer 233

is not permitted because employers and unions have a duty to bargain in good faith, and bargaining is mandatory for subjects relating to wages or working hours.

Question 234

Members of the Metal Workers Union are in negotiations with MetalCo, their employer. Union members want MetalCo to agree to not handle or use any materials provided by MetalCo’s suppliers that employ nonunion employees. This practice:

Answer 234

is not permitted because it is an illegal hot-cargo agreement.

Question 235

Forest Products is a mill that has always successfully resisted unionization of its workers by offering better pay and benefits than other employers. Nevertheless, Wilson and several others would like to unionize. The first step they will need to take is to:

Answer 235

have workers sign authorization cards.

Question 236

Melinda is a leader of a group attempting to unionize employees of an automobile factory. Melinda asks workers to stop what they are doing on the assembly line in order to read a flyer and fill out a three page survey. Managers of the automobile factory:

Answer 236

can prevent Melinda’s unionization activities if it has a legitimate business reason for doing so.

Question 237

Negotiators representing Levesque, Inc., are in negotiation with the employees’ union regarding terms of a new collective bargaining agreement. Levesque does not want to renegotiate, as it received favorable terms under the current agreement. In order to hold off the union as long as possible, Levesque has been giving unions reasons why they cannot negotiate right now for over eighteen months. This practice is likely:

Answer 237

. not a permissible negotiating strategy because excessive delaying tactics constitute impermissible bad faith bargaining.

Question 238

BigCo’s unionized employees and management are involved in difficult negotiations. Union members want to put pressure on BigCo executives to reach an agreement. Union members decide to direct a boycott against BigCo’s leading customers in order to pressure BigCo to agree with the union’s proposed terms. This action:

Answer 238

is an illegal secondary boycott.

Question 239

Members of the Service Workers Union (SWU) are preparing to strike, as negotiations with their employer, Holiday Hotels, have broken down. However, SWU’s current collective bargaining agreement with Holiday Hotels has a no-strike clause, a provision in the agreement in which the SWU promised that during the life of the contract the employees will not engage in strikes, slowdowns, or other job actions. SWU leadership wants to ignore the no-strike clause and strike anyway. This decision is:

Answer 239

illegal because a no-strike clause is an enforceable term of a collective bargaining agreement.

Question 240

Meg needs an electrician to do some work at her home. Her father advises her to make sure that the firm she plans to hire is not a closed shop. Meg is not sure what this means, but later learns that the “closed shop” that her father was referring to is:

Answer 240

a firm that requires union membership by its workers as a condition of employment.