Which of the following is NOT a purpose of federal securities regulation?
a. To ensure that only worthwhile securities are sold in interstate commerce.
b. To ensure adequate disclosure by issuers of securities.
c. To ensure that inside information is not abused.
d. To prevent the use of fraud in the marketing of securities.
Which of the following is untrue regarding the contracts of intoxicated persons?
a. If an intoxicated person is unable to understand the nature and consequences of his
act, then the contract is voidable.
b. The effect of intoxication is generally the same as that given to contracts that are
voidable because of incompetency.
c. Slight intoxication will destroy one’s contractual capacity.
d. To make a contract voidable, a person need not be so drunk that he is totally without
reason or understanding.
Stewart entered into a contract with Will to have Will build a 10-unit apartment
complex on Elm Street in Randolph County. Unknown to both parties, this land had
recently been rezoned and only single-unit dwellings can be constructed.
a. This is a mistake in law, which is treated no differently than a mistake in facts.
b. Since everyone should know the law, Stewart is liable to Will for any losses he may
incur.
c. Stewart is obligated to buy land elsewhere and have the complex constructed on
property zoned for apartments.
d. Will is liable to Stewart since Will is a contractor.
The Fair Debt Collection Practices Act prohibits:
a. a debt collection agency from communicating directly with a debtor under any
circumstances.
b. calls after 6 p.m.
c. a debt collection agency from calling a debtor each day, several times a day,
demanding payment.
d. a creditor from calling a debtor regarding payment of a bill.
In the Catamount Slate Products, Inc. v. Sheldon case, the court found that:
a. the moment of contract formation is to be determined by the intent of the parties,
which is a question of law.
b. the intent of the parties to be bound to a contract is determined by an objective
standard of what a reasonable person would have believed based on the words and
conduct of the parties.
c. the intent of the parties to be bound to a contract is determined by a subjective
standard of what the parties actually believed.
d. an oral agreement reached at mediation cannot constitute a binding, enforceable
settlement agreement.
Which of the following is correct with regard to common stock?
a. The Revised Act has eliminated the terms “preferred” and “common.”
b. Common stock does not have any special contract rights or preferences.
c. Common stock generally bears the greatest risk of loss in the event of the failure of
the enterprise.
d. All of these are correct.
Which of the following would most likely be a merchant with respect to the goods in
question under the UCC definition?
a. Arthur is an authorized IBM computer dealer.
b. Brian employs two salesmen to sell his homemade furniture.
c. Clarence has a store in which he sells used lawn mowers.
d. All of the above.
The doctrine of unconscionability has evolved through its application by the courts to
include:
a. contract negotiating procedures.
b. substantive contract terms.
c. good faith.
d. Both (a) and (b).
Carolyn, a cashier at Tops Supermarkets, may cash checks for up to $20 over a
purchase amount. A friend needs money for a dress so Carolyn cashes a check for $50
with no purchase. The check bounces. Carolyn is:
a. liable because she violated her duty of obedience.
b. liable because she breached her duty to inform.
c. not liable since she has apparent authority to take the check.
d. not liable unless she knew her friend did not have the money in the bank.
The duty of a possessor of land to persons who come on the land usually depends on
whether those persons are:
a. invitees, trespassers, or licensees.
b. reasonable persons.
c. fiduciaries.
d. involved in abnormally dangerous activities.
In 1998, Boyd created a trust that would become effective on his death. In the trust
instrument, Boyd specified that all of the income from his stocks and bonds be used for
the benefit of St. John’s Hospital and indicated that his brother Chad should administer
the trust.
a. What kind of trust is this?
b. What is Boyd with relationship to the trust?
c. What is the corpus of the trust?
d. What is Chad with relationship to the trust?
The concept of the “right to cooperation” includes that:
a. where one party’s required cooperation is not timely, the other party is excused from
any resulting delay in her own performance.
b. where one party’s required cooperation is untimely, the other party is required to
tender performance as if the first party had tendered in a timely manner.
c. where neither party is at fault and the agreed manner of delivery becomes
impracticable, both parties are required to negotiate a new price.
d. None of the above.
Match each statement with the correct term below.
a. One whose profits must be used exclusively for charitable, educational, or scientific
purposes.
b. One created under the laws of a given state.
c. One created under the laws of any other state or jurisdiction.
d. Person who takes the preliminary steps to organize a corporation.
e. Person who agrees to purchase stock in a corporation.
f. Rules governing a corporation’s internal management.
g. One formed in substantial compliance with the incorporation statute and the required
organizational procedure.
h. One not formed in compliance with the statute but recognized for most purposes as a
corporation.
i. Prevents a person from raising the question of a corporation’s existence.
j. One created to administer a unit of local civil government.
k. Contractual right to purchase from a corporation shares of a specified class or
classes.
l. Source of capital creating no ownership interest and involving the corporation’s
promise to repay funds loaned to it.
m. A type of debt security.
n. Unsecured bonds; have only the obligation of the corporation behind them.
o. Condition the payment of interest to some extent on corporate earnings.
p. Bonds subject to redemption.
q. Eligible corporation electing under the Internal Revenue Code to be taxed as a
partnership.
r. Shares are owned by large number of people and are widely traded.
s. May be exchanged for other securities.
t. Claims against a corporation’s general assets and also a lien on specific property.
u. Basic organizational document of a corporation; charter.
v. Shares reacquired by a corporation.
w. Opportunity to purchase a pro rata share of new stock offerings.
x. Source of capital creating an ownership interest in the corporation.
y. A corporation’s exercise of the right to repurchase its own shares.
1) articles of incorporation
2) income bonds
3) Subchapter S
4) subscriber
5) domestic corporation
6) corporation de jure
7) publicly held corporation
8) equity securities
9) redemption
10) callable bonds
11) bylaws
12) nonprofit corporation
13) foreign corporation
14) treasury stock
15) stock options
16) bond
17) corporation de facto
18) debt security
19) secured bonds
20) preemptive right
21) public corporation
22) convertible bonds
23) debentures
24) promoter
25) corporation by estoppel
If Janice, while driving her car, carelessly runs into Paul, a pedestrian who is crossing
the street within the crosswalk, Janice is liable in negligence for:
a. physical injuries Paul sustains from the collision because Janice’s negligent conduct
proximately caused harm to a legally protected interest.
b. offensive contact if her side mirror brushes against Paul, even if there are no physical
injuries to him.
c. offensive contact if her car touches Paul’s coat, even if there is no damage to the coat.
d. All of the above.
The APA’s requirements that the agency provide prior notice of a proposed rule, an
opportunity for interested parties to participate in the rulemaking, and publication of a
final draft containing a concise general statement of the rule’s basis and purpose are the
requirements for issuance of rules in accordance with:
a. formal rulemaking.
b. hybrid rulemaking.
c. informal rulemaking.
d. negotiated rulemaking.
RICO has been successfully applied to businesses that are not engaged in organized
crime, despite the fact that its intent is to target organized crime.
A group of investors brings a class action lawsuit against the Z & R Accounting Firm
under SEC Rule 10b-5. Angela, an accountant with the firm, had done an audit of the
Pennymart Inc. books. The audit failed to disclose that Orrin, the president of
Pennymart, had stolen large amounts of cash from the firm. Pennymart eventually filed
for bankruptcy as a result of the thefts. What is the likely result of the suit?
Seller, through no fault of its own, is unable to deliver the goods to buyer because the
agreed type of carrier is unavailable. Explain what the Code requires.
In some states, a lender who charges a usurious rate forfeits both the principal and
interest on the loan.
An heir of a person who dies receives title to the property of the decedent by reason of a
gift.
If no performance is rendered at all under a contract, then the damages will be the loss
of value of the promised performance.
Section 1 of the Sherman Act provides that U.S. antitrust laws shall have a narrow
reach.
David dies an untimely death in a boating accident two days after writing a check to his
landlord. When the check is presented to his bank two weeks later, it refuses to pay. The
landlord will have to file a claim in any probate proceedings if he wishes to collect on
the check.
If a contract explicitly provides that it may be assigned, then rights under it are
assignable even if the assignment would change the duty, risk, or burden of
performance on the obligor.