Under Rule 10b-5 a company may not have a “no comment” policy, and must act to
dispel untrue rumors.
a. True
b. False
Answer:
The first step in the FDA approval process for new drugs is their classification by the
__________ based on currently accepted medical use and potential for abuse.
a. National Institute of Health
b. The Consumer Product Safety Commission
c. Drug Enforcement Administration
d. Congress
Answer:
A(n) __________ is a court order based on an agreement by the defendant corporation
to take measures to remedy the problem that led to the criminal charges.
a. ex post facto agreement
b. nolo contendere
c. consent decree
d. warrant agreement
Answer:
A(n) __________ subordination is an agreement between two secured creditors by
which the subordinating party agrees that the lien of the other creditor will have priority
notwithstanding the relative priorities that the parties’ liens would otherwise have under
applicable law.
a. unenforceable
b. debt
c. lien
d. equitable
Answer:
The executive privilege fails to protect the President during his or her term of office
from civil litigation over events that occurred before he or she took office.
a. True
b. False
Answer:
In which of the following situations would the doctrine of res ipsa loquitur apply?
a. A truck backed into a fence.
b. A jar of jam fell on your foot.
c. A post operative x-ray showed a surgical sponge in your stomach.
d. A door slammed on your foot.
Answer:
Which of the following involves settling accounts and liquidating assets of a
partnership for the purpose of making distributions and ending the partnership?
a. Debt resolution
b. Bypassing formalities
c. Termination
d. Winding-up
Answer:
Unsolicited merchandise sent by U.S. mail may be kept by the recipient without
incurring any obligation to the sender.
a. True
b. False
Answer:
A rule made by a federal agency is not final until approved by Congress.
a. True
b. False
Answer:
Under the doctrine of __________ liability, once the court determines that multiple
defendants are at fault, the plaintiff may collect the entire judgment from any one of
them, regardless of the degree of that defendant’s fault.
a. joint and individual liability
b. cumulative liability
c. contributory liability
d. joint and several
Answer:
Which of the following is true regarding shareholder primacy?
a. It is never legally mandated.
b. It is always legally mandated.
c. It is legally mandated only in very narrow circumstances.
d. There is no such thing.
Answer:
In regard to successor liability, courts applying the __________ look for constancy
between the buyer and seller to determine whether the successor company is essentially
a mere continuation or reincarnation of the predecessor entity.
a. market-share approach
b. product-line theory
c. traditional successor liability rule
d. continuity-of-enterprise approach
Answer:
Under the doctrine of __________, the plaintiff’s damages in a strict liability action
may be reduced by the degree to which his or her own negligence contributed to the
injury.
a. comparative fault
b. contributory negligence
c. assumption of risk
d. both comparative fault and contributory negligence
Answer:
The defendant formally pleads guilty or not guilty at the:
a. arraignment.
b. preliminary hearing.
c. indictment.
d. trial.
Answer:
A federal court of appeals in one circuit must follow an earlier decision on an issue
made by a federal court of appeals in another circuit.
a. True
b. False
Answer:
The definition of “offer” under the Securities Act of 1933 is much broader than that in
contract law.
a. True
b. False
Answer:
The obligation of a company’s directors to manage the corporation for the best interest
of the __________ is recognized as the primary obligation of directors of a corporation.
a. corporation
b. officers
c. employees
d. community
Answer:
An independent contractor is also considered an employee of the person for whom work
is being done.
a. True
b. False
Answer:
The wrongful interference with the right to the quiet use and enjoyment of land is
associated with the tort of:
a. trespass.
b. nuisance.
c. ultra hazardous activities.
d. strict liability.
Answer:
Fact Pattern 9-1
Frank belongs to the same country club as his former physician, Dr. Bozo. Frank
recently started dating Dr. Bozo’s former wife, Alice, and decided to find a new
physician. Frank found out that Dr. Bozo has been telling their mutual friends at the
club about Frank’s high blood pressure and problems with anxiety. Frank is very angry,
confronts Dr. Bozo on the golf course, and tells him that he is going to sue him under a
federal law protecting medical information. Dr. Bozo laughs and says in front of a
number of Frank’s golfing buddies, “I’m not surprised that you’re going nuts and that
you have high blood pressurehanging out with Alice has done that to many a man.”
Refer to Fact Pattern 9-1. Is there any federal law prohibiting Dr. Bozo from revealing
Frank’s medical history?
a. There is no such federal law.
b. There is a federal law called the Health Insurance Portability and Accountability Act
that prohibits the revelation of private medical information by health care providers.
c. There is a federal law called the Gramm-Leach-Bliley Act that prohibits the
revelation of private medical information by health care providers.
d. There is a federal law called the Physician-Nurse Privacy Act that prohibits the
revelation of private medical information by health care providers.
Answer:
What type of efficiency exists when competition among individual producers drives all
but the lowest-cost producers of goods or services out of the market?
a. Allocative
b. Economic
c. Strategic
d. Productive
Answer:
A securities fraud claim can be used as a predicate act in a civil case under the
Racketeer Influenced and Corrupt Organizations Act regardless of whether the
defendant has been criminally convicted in connection with the fraud.
a. True
b. False
Answer:
Determining whether a regulated company or person is complying with laws and
regulations cannot be a function of administrative agencies because of Congressional
prohibitions.
a. True
b. False
Answer:
Which of the following is NOT a type of recording statute?
a. Race statute
b. Notary statute
c. Pure notice statute
d. Race-notice statute
Answer:
Any security offered by the United States Government or any national bank would be
considered an exempt security under the 1933 Act’s registration requirements.
a. True
b. False
Answer:
The process by which property ownership is transferred from a nation to a private entity
is called:
a. privatization.
b. nationalization.
c. appropriation.
d. a transfer.
Answer:
Which of the following is an example a statement made by a salesperson that would be
considered “puffing”?
a. This car will get 35 miles per gallon.
b. This is a genuine diamond ring.
c. This is an original work of art.
d. This copier is the best in the business.
Answer:
The Organization of Economic Cooperation and Development (OECD) is:
a. comprised of nations form North America, Europe, and Asia-Pacific.
b. a subsidiary of the European Union.
c. comprised of nations who entered into the North American Free Trade Agreement.
d. comprised of states inside the U.S.
Answer:
A ground lease is a very long-term lease.
a. True
b. False
Answer:
According to the Oncale v. Sundowner Offshore Services case referenced inthetext, the
U.S. Supreme Court rule that Title VII does not apply to same-sex harassment.
a. True
b. False
Answer:
Companies like __________ have suffered severe financial penalties as a result of
decisions the public viewed in hindsight as __________.
a. Quaker Oats Company, unethical
b. General Motors, criminal
c. General Motors, unethical
d. General Motors, unjust
Answer:
CASE 3In re Lehman Bros. Mortgage-Backed Securities Litigation (2011) involved a
question of whetherrating agencies that helped select a pool of mortgages for a
mortgage-backed security were “underwriters” under the 1933 Act or “controlling
persons” under section 15 of the 1933 Act. How did the court rule?
a. The court ruled that the proof established that the rating agencies were both
underwriters and controlling persons under the 1933 Act.
b. The court ruled that the proof failed to establish that the rating agencies were either
underwriters or controlling persons under the 1933 Act.
c. The court ruled that the proof established that the rating agencies were underwriters
under the 1933 Act but that the proof failed to establish that the rating agencies were
controlling persons under the 1933 Act.
d. The court ruled that the proof established that the rating agencies were controlling
persons under the 1933 Act but that the proof failed to establish that the rating agencies
were underwriters under the 1933 Act.
Answer:
Fact Pattern 7-1
Prudence offered to sell her car to Danny for $3,000. Danny was not sure what to do, so
he asked Prudence if she would hold the offer open for him for one week for $50.
Prudence said sure, and the parties signed a contract to the effect that Prudence would
hold the car. A few hours later, Bobby unexpectedly offered Prudence $3,500 for the
car, and Prudence sold it to him on the spot. Danny decided to buy the car, but when he
came by to pick it up the next day, it was gone. Prudence gave Danny his $50 back
telling him that was her only obligation and that if he had any complaints, he could take
it up with Bobby. Danny found a similar car the next week for $3,500 and purchased it.
Refer to Fact Pattern 7-1. What damages, if any, could Danny likely collect against
Prudence in litigation over the car?
a. None
b. Reliance damages consisting of $500
c. Incidental damages consisting of $50
d. Compensatory damages consisting of $500
Answer:
A right of action under section 10(b) may expire before a plaintiff discovers he has been
wronged or even before damages have been suffered at all.
a. True
b. False
Answer: