Which of the following is true regarding the state of mind needed in order to find a
violation of Section 16(b) involving short-swing trading?
a. Liability is imposed under Section 16(b) regardless of the insider’s state of mind.
b. Intent to violate the securities laws must be found in order for there to be a violation
of Section 16(b).
c. A trader must at least act without caution in order to be found liable for violating
Section 16(b).
d. A trader must at least act negligently in order to be found liable for violating Section
16(b).
Answer:
Securities issued in a private placement are called __________ securities.
a. qualified
b. private
c. restricted
d. shelf
Answer:
An otherwise copyrightable work that is prepared by an employee within the scope of
employment, is called a(n) __________ and belongs to the __________.
a. a work for hire, employee
b. derivative work, employee
c. a work for hire, employer
d. a derivative work, employer
Answer:
Fact Pattern 16-1
Patty owns and operates a gym. Her main competitor is Jason who runs another gym
three streets from her. They cater to the same clientele. Patty and Jason keep trying to
undercut each other in order to attract customers. One evening Patty sees Jason in the
local coffee shop and sits down to talk with him. They discuss how difficult it is to do
upgrades and make money with the prices they are charging. Patty winked at Jason and
said “You know, charging $80 per month would enable a good profit margin.” The next
day Patty started charging $80 per month as did Jason. Customers started complaining
particularly after another coffee drinker and gym customer at a table sitting at a table
near Patty and Jason made it known that they had seemed very cozy. Patty and Jason
deny any agreement to set the same price for gym membership. They avow that the
decision was made by each of them independently.
Refer to Fact Pattern 16-1. Is the fact that no express words passed between Patty and
Jason a defense to charges of antitrust violation?
a. Yes, because direct evidence is required in order to establish an illegal agreement to
fix prices.
b. Yes, both because direct evidence is required in order to establish an illegal
agreement to fix prices and because the courts require evidence of an explicit agreement
in such cases.
c. It is a defense to charges of criminal antitrust violations, but not to civil antitrust
violations.
d. No, because a knowing wink can mean more than words.
Answer:
A Chapter 7 discharge is not available to a debtor who has received a discharge in a
bankruptcy filed in the preceding _____ years or in a Chapter 13 case filed in the
preceding _____ years.
a. two; four
b. six; seven
c. eight; six
d. seven; six
Answer:
The __________ occurs when individuals exploit a limited shared resource and
contribute to its depletion knowing that there will be a detrimental impact in the long
term.
a. impact on the masses
b. destructive resources impact
c. tragedy of the commons
d. absolute negative
Answer:
In the Thompson v. W. States Medical Centercase referenced in the text, the U.S.
Supreme Court ruled that compounded drugs are illegal.
a. True
b. False
Answer:
Which of the following are defenses to patent-infringement claims?
a. Noninfringement, invalidity of the patent, misuse of the patent, and innocent
infringement
b. Noninfringement, invalidity of the patent, fair use, and innocent infringement
c. Noninfringement, fair use, misuse of the patent, and innocent infringement
d. Fair use, misuse of the patent, innocent infringement, and illegality of the patent
Answer:
A(n) __________ loan is one in which the original lender sells shares to other parties.
a. master
b. syndicated
c. participation
d. attached
Answer:
What level of culpability does CERCLA require before authorizing an award of
punitive damages against a polluter?
a. Intentional violation of the law
b. Recklessness
c. Negligence
d. It is only required that the defendant be the responsible party in regard to the
pollution with the defendant’s mental state being irrelevant.
Answer:
In India, Hindu law is applied to most commercial transactions.
a. True
b. False
Answer:
Commercial transactions involving the sale of goods, movable personal property, are
governed by which of the following?
a. Article 2 of the Uniform Commercial Code
b. Articles 1-3 of the Uniform Sale of Goods Code
c. Article 1 of the Federal Sales Code
d. Article 1 of the Uniform Credit Code
Answer:
Federal judges are appointed for ten year renewable terms.
a. True
b. False
Answer:
The federal court system has thirteen courts of appeal.
a. True
b. False
Answer:
There is no minimum monetary requirement for lawsuits involving a federal question.
a. True
b. False
Answer:
The principal regulatory program established by the Clean Water Act is the:
a. National Pollutant Discharge Elimination System.
b. Federal Pollutant Reduction System.
c. Uniform Water Pollution Requirements.
d. Nationwide Clean Water Policy.
Answer:
A __________ is a public offer to all the shareholders of a corporation to buy their
shares at a stated price.
a. leveraged buy out
b. tender offer
c. target bid
d. merger
Answer:
Even when a U.S. court finds a foreign corporation in violation of the antitrust laws,
any award of damages is meaningless without foreign enforcement of the award unless
the foreign corporation has assets in the U.S. that can be attached to satisfy the
judgment.
a. True
b. False
Answer:
Vertical market division between a franchisor and a franchisee may be lawful when
interbrand competition is enhanced by the limitation on intrabrand competition.
a. True
b. False
Answer:
A provision in a loan agreement that the borrower cannot incur additional debt beyond a
certain amount is an example of a(n) __________ covenant.
a. absolute
b. prohibitive
c. negative
d. affirmative
Answer:
Fact Pattern 2-1
Jack decides to donate leftover food from his restaurant to a homeless shelter. Brock, an
employee who was angry with Jack over not getting a raise, claimed that Jack decided
to donate the food only for publicity and that Jack did not really care about homeless
people. Peggy, another employee disagreed, contending that regardless of his
motivation, Jack was acting ethically because of the consequences involved and the
number of people helped.
Refer to Fact Pattern 2-1. Upon which of the following would Peggy most likely rely to
support her contention?
a. Rawlsian moral theory
b. Teleological theory
c. Artificial person application
d. Deontological theory
Answer:
An employee who trades or tips using confidential information belonging to his or her
employer can be liable under the Mail and Wire Fraud Acts.
a. True
b. False
Answer:
A “red herring” is the popular name given to the final prospectus under the 1933 Act.
a. True
b. False
Answer:
Scuba manufacturer designs and sells the best scuba gear on the market. All industry
and governmental standards are met, and there is no better technologically feasible
design than that used by the manufacturer. There had been no previous problems with
the gear, but on one unfortunate day, the breathing apparatus on a unit malfunctioned
resulting in a diver needing medical care. Assuming recognition in the jurisdiction
involved, which of the following is the best defense to a lawsuit alleging a design defect
brought by the diver?
a. Comparative fault
b. Assumption of the risk
c. State-of-the-art
d. Ultrahazardous activity
Answer:
Unilateral conduct may violate Section 1 of the Sherman Act under some
circumstances.
a. True
b. False
Answer:
Cases before federal courts of appeal are usually presented before a panel of nine
judges.
a. True
b. False
Answer:
Sales of real property interests to nonresident aliens may be regulated by the state but
are not regulated by the federal government.
a. True
b. False
Answer:
Firms can incur liability under Section 2 of the Sherman Act by acquiring monopoly
power through corporate mergers or acquisitions.
a. True
b. False
Answer:
In 1938, the FLSA set the first minimum wage at:
a. $1.00 per hour.
b. $2.50 per hour.
c. fifty cents per hour.
d. twenty-five cents per hour.
Answer:
A(n) __________ contract occurs when one party is induced to enter a contract on a
“take it or leave it” basis.
a. adhesion
b. merchants
c. output
d. requirement
Answer:
The U.S. Supreme Court has repeatedly upheld the fundamental principle that
government employees acting beyond their authority can still bind the government
based upon apparent authority.
a. True
b. False
Answer:
In a __________ action under the Sherman Act, state attorneys general may bring civil
actions for injuries sustained by residents of their respective states.
a. parens patriae
b. private attorneys general
c. Herfindahl-Hirschman
d. resale price maintenance
Answer:
State X passes a law restricting the right of citizens to vacation in foreign countries
because the state prefers that its citizens spend their vacation dollars in the U.S. A group
of state citizens challenge the law. Set forth the standard a court would apply in
reviewing the law and the likely outcome of the case.
Answer:
Under what circumstances should a judge grant a motion for summary judgment?
Answer:
List the elements necessary for the doctrine of promissory estoppel to be applied.
Answer:
Penny found a billfold on a city street; looked inside to determine its owner and
returned it to its true owner, Richard. A few days later she found out that Richard had
offered a reward in the amount of $100 for the return of the billfold. She asks Richard
for the reward money, but he refuses. Is Penny entitled to the reward, and why or why
not?
Answer: