BUS 101 Test 1 Study Guide

27. The concept of recovering pay from executives with failing companies is also known as: A) "off the top" B) "clawback" C) "return to sender. D) None of the above.

"clawback"

37. In 2000, how much did Americans spend on fast food? A) $6 billion B) 19 billion C) $43 billion D) $110 billion

$110 billion

23. In 2007, the median compensation of board members at the largest U.S. companies was approximately: A) $119,000. B) $185,000. C) $193,000. D) $205,000.

$205,000.

33. Social responsibility shareholder resolutions generally garner approximately % of the vote? A) 15 B) 25 C) 33 D) 50

15

31. According to Social investment forum, socially responsible investment grew more than % between 2005 and 2007. A) 18 B) 7 C) 27 D) 11

18

34. The SEC was founded in: A) 1896 B) 1919 C) 1934 D) 1951

1934

19. According to a Harris Interactive poll of people think business has too much power. A) 55% B) 65% C) 75%. D) 85%

85%

40. Which of the following is not an instance of "insider trading"? A) An auditor using nonpublic information about the company to invest in its stock. B) A marketing executive briefing stock analysts on the company's sales performance. C) The CEO's cousin buying stock after the CEO mentioned a pending offer to buy the company. D) A stock broker passing an "inside tip" to a client, but not trading for his or her own account.

A marketing executive briefing stock analysts on the company's sales performance.

35. An acronym for a way to resolve lawsuits without going to court is A) COP B) ADR C) ALJ D) EDL

ADR

16. The largest bailout in U.S. history was which company. A) Enron. B) AIG. C) Wells Fargo. D) General Motors.

AIG

33. I went to jail for violating the CAN-SPAM act. Who am I? A) Sarah Moreland B) Scott Karp C) Adam Vitale D) Alan Sanders

Adam Vitale

32. Which hotelier agreed in 2000 to pay $8 million dollars to settle a class-action racial discrimination lawsuit. A) Hilton. B) Adam's Mark. C) Sheraton. D) Ramada Inn.

Adam's Mark.

36. The social objectives of investing in stocks include eliminating from investment portfolios companies that: A) Pollute the environment. B) Discriminate against employees. C) Make dangerous products like tobacco or weapons. D) All of the above.

All of the above

34. Which of the following are arguments against corporate social responsibility? A) Lowers economic efficiency and profits. B) Imposes unequal costs among competitors. C) Requires social skills business may lack. D) All of the above are arguments against corporate social responsibility.

All of the above are arguments against corporate social responsibility.

35. The costs of corporate social responsibility may ultimately be passed on to the: A) Employees through fewer health benefits. B) Consumer through high prices. C) Investor through lower dividends. D) All of the above.

All of the above.

41. What was Fortune Magazine's 2009 America's Most Admired company? A) Whole Foods. B) Pfizer. C) Apple. D) Sun Microsystems.

Apple

32. Positive reputation can be valued as an intangible corporate: A) Asset. B) Liability. C) Charity. D) Expense.

Asset.

24. In the United States, which committee is almost always comprised solely of outsiders A) Audit B) Procurement C) Standards and Practices D) Safety Compliance

Audit

25. Colin Carter was a co-author of: A) Way too much!!! Executive compensation in the Western World B) How to run an ethical business C) Back to the Drawing Board D) What hath we wrought? Conflict of interest in 2000 and beyond

Back to the Drawing Board

25. Examples of modern day stewardship do not include: A) A stakeholder approach to strategic corporate planning. B) An attitude of enlightened self-interest. C) Developing social partnerships with needy groups. D) Both A. and B., but not C.

Both A. and B., but not C.

16. According to David Korten: A) Business has become most powerful entity on the planet. B) Businesses should need to secure stockholder approval to engage in philanthropic practices. C) The iron law of responsibility is not valid. D) Coca-cola has failed to protect the environment of Brazil.

Business has become most powerful entity on the planet.

36. Proponents against corporate social responsibility feel that public officials, not business people, should solve societal problems because: A) Business people do not have the skill-set to solve societal problems. B) The private sector is not mandated to solve these issues. C) Both A. and B. D) None of the above.

Business people do not have the skill-set to solve societal problems.

30. What is the primary organization which represents institutional and investment funds investors: A) TIA. B) CII. C) LOP. D) TBI.

CII.

38. What was the nickname of the bill introduced in 2005 to limit the fast food industry's liability? A) hamburger bill B) Cheeseburger bill C) McDonald's protection act D) McCheese bill

Cheeseburger bill

39. What company launched an advertising campaign in 2001 under the slogan "Live Richly" E) Citigroup F) Househould Financial Services G) JP Morgan H) EF Hutton

Citigroup

41. Which of the following companies is NOT generally believed to have filed fraudulent financial statements in the early 2000s? A) Comcast B) Adelphi C) Enrom D) WorldCom

Comcast

16. Which of the following is an NGO that represents over 220 consumer groups in 115 countries: A) Consumers Union. B) Consumers Abroad. C) Consumers International. D) Consumers Today.

Consumers International.

18. The "right to be heard" assures that: A) Consumers' interests will receive full and sympathetic consideration in the formulation of government policy. B) Consumers will be protected against fraudulent or misleading information. C) Consumers will be assured satisfactory quality and service at a fair price. D) Consumers will be given all the facts to make an informed choice.

Consumers' interests will receive full and sympathetic consideration in the formulation of government policy.

27. An identifying marker placed on a user's computer hard drive during visits to some Web sites is called a: A) Spy. B) Virus. C) Cookie. D) Firewall.

Cookie

28. Which phrase of corporate responsibility occurred in the 1950-1960s? A) Corporate Social Stewardship. B) Corporate Social Responsiveness. C) Corporate/Business Ethics. D) A, B and C are all false.

Corporate Social Stewardship.

22. Which of the following is true about corporate boards? A) Corporate boards average 10 members. B) About half of the directors are "outside" directors. C) Approximately one-third of all companies have at least one woman on their board. D) About half of all companies have at least one ethnic minority board member.

Corporate boards average 10 members.

24. According to a modern day expression of the stewardship principle: A) Corporate managers should acknowledge business and society interdependence. B) Corporate managers should balance the interests and needs of many diverse groups in society. C) Voluntary actions should be taken to promote the social good. D) Both A. and B., but not C.

Corporate managers should balance the interests and needs of many diverse groups in society.

29. Which CEO of AIG earned $1 in 2008. A) Edward Liddy B) Douglas Sandhaus C) Judith Smylie D) Paul Randazzo

Edward Liddy

29. HP Brazil, a subsidiary of Hewlett-Packard, developed the Digital Garage project to: A) Promote the sale of PCs and notebook computers in the Brazilian consumer market. B) Assist with natural resource conservation and recycling programs in their plant. C) Empower less privileged Brazilian youth with leadership, teamwork, IT and other skills to participate in the growing technological society. D) All of the above.

Empower less privileged Brazilian youth with leadership, teamwork, IT and other skills to participate in the growing technological society.

1. In January, 2009, 19,000 people became ill by eating contaminated chicken. A) True B) False

False

1. The three types of stockholders who own shares of stock in United States corporations are individuals, institutions, and secular. A) True B) False

False

11. Boards of Directors of large companies are careful to make sure that members of the Compensation committee have no relationship to the current CEO. A) True B) False

False

11. In the United States, the legal system has generally looked unfavorably on consumer claims. A) True B) False

False

12. In 2007, CEOs in the United States made 406 times what the average employee made. A) True B) False

False

12. The CAN-SPAM effect went into effect in 2007. A) True B) False

False

13. Laws and regulations help create an unleveled playing field for businesses that compete against one another. A) True B) False

False

13. The ratio of average employee pay to CEO pay peaked at 480 times in 1990. A) True B) False

False

14. In 2005, Congress passed a law which required most large class-action suits to be moved from federal to state court. A) True B) False

False

3. Investors always choose to invest in the stock of companies that pay high dividends. A) True B) False

False

4. Walmart had more profits in 2009 than any other company A) True B) False

False

5. The charity principle is a relatively new notion. A) True B) False

False

5. The right to satisfaction is generally considered the primary consumer right. A) True B) False

False

5. Typically, Boards of Directors meet in full 8 times a year. A) True B) False

False

6. According to the stewardship principle, professional managers are supposed to, but are not obliged to, see that everyone benefits from the company's action. A) True B) False

False

6. In the U.S. The FCC enforces the law prohibiting deceptive advertising. A) True B) False

False

8. The Federal Trade Commission's mission includes the safety and effectiveness of a wide range of consumer products, including pharmaceutical drugs, medical devices, foods and cosmetics. A) True B) False

False

25. Which of the following departments was established in 1914 and has been given additional powers to protect consumers over the years, including in the area of online privacy? A) Federal Trade Commission. B) Food and Drug Administration. C) Consumer Product Safety Commission. D) Antitrust Division of the Department of Justice.

Federal Trade Commission.

23. Which of the following is true: A) Food manufacturers must list the number of calories in bottled foods. B) Labels may, but are not required, to list the amount of trans fat in foods. C) A food item must be deemed organic by the FDA to advertise itself as organic. D) A, B and C are all true.

Food manufacturers must list the number of calories in bottled foods.

39. What company took responsibility to dredge the New York Harbor in 2002? A) General Electric. B) Merck. C) Pfizer. D) New York Power.

General Electric.

33. Which of the following is not an argument in favor of corporate social responsibility? A) Imposes unequal costs among competitors. B) Responds to changing stakeholders' demands. C) Corrects social problems caused by business. D) Discourages government regulation.

Imposes unequal costs among competitors.

22. The iron law of responsibility says that: A) In the long run, those who do not use power responsibly will lose it. B) In the short run, sacrifice social goals for economic goals. C) Law is most important, more than social or economic responsibility. D) In the long run, economic responsibility leads to social responsibility.

In the long run, those who do not use power responsibly will lose it.

20. Which of the following is not a reason for the consumer movement? A) Unreliable and unsafe products. B) Promotion of harmful products. C) Increased competition among corporations. D) Misleading advertising claims for some goods and services.

Increased competition among corporations.

34. Businesses can take a number of measures to respond voluntarily to consumer demands. Which of the following is an example of such a measure? A) Voluntary Product recalls B) Industry codes of conduct C) Consumer advocacy groups D) Alternative dispute resolution policies

Industry codes of conduct

22. Which of the following statements is not true about the organization Consumers Union (the publisher of Consumer Reports magazine)? A) It is involved in activities promoting the interests of consumers. B) It conducts extensive tests on selected consumer products and services. C) It is supported by the federal government. D) It publishes the results of tests, with ratings on brand-name basis, in magazines.

It publishes the results of tests, with ratings on brand-name basis, in magazines.

38. What company quickly removed an ad that referred to mothers who "wear their babies". A) McDonalds B) Pfizer C) Merck D) Johnson & Johnson

Johnson & Johnson

31. Which of the following was NOT part of the Class Action Fairness Act: A) The burden of proving liability was shifted to the consumer. B) Uniform standards were set up to determine liability. C) Judges rather than juries would determine the original amount of punitive damages. D) Most large class action suits were moved from state to federal court.

Judges rather than juries would determine the original amount of punitive damages.

28. Who earned $686 million over 13 years at Exxon Mobil. A) Charles Smithson B) Lee Raymond C) Dennis Kozlowski D) Frederick Thompson

Lee Raymond

35. In 2009, what company voted to give itself an advisory role in executively salary setting: A) Merck B) New Amsterdam C) Pfizer D) Smithson Enterprises

Pfizer

40. Odwalla began pasteurizing juices in order to: A) Prevent the need for governmental regulation B) Build good will through advertising C) Comply with disputed United Nations mandates D) Prevent Minute Maid for consolidating an important issue

Prevent the need for governmental regulation

30. Which of the following is not an argument in favor of corporate social responsibility? A) Discourages governmental regulation. B) It balances businesses' power with their responsibility to act. C) Improves Business value. D) Promotes short-term profitability for businesses.

Promotes short-term profitability for businesses.

38. The mission of the Securities and Exchange Commission (SEC) is to: A) Protect shareholders' rights by making sure that stock markets are run fairly. B) Protect companies from hostile takeovers. C) Ensuring that institutional investors do not take control of company management. D) Ensuring that the federal treasury receives its share of the revenues from stock trading.

Protect shareholders' rights by making sure that stock markets are run fairly.

20. An individual who cannot attend an annual stockholder's meeting can vote by: A) Marker. B) Proxy. C) Check. D) Que.

Proxy.

18. Investors may receive an economic benefit from the ownership of stock by: A) Receiving federal reserve credits. B) Receiving dividends. C) Receiving interest. D) Both b and c, but not a.

Receiving dividends.

24. Which of the following is not a responsibility of the Federal Trade Commission: A) Competitive pricing. B) Online Privacy. C) Packaging and labeling. D) Safety standards for consumer products.

Safety standards for consumer products.

39. In response to concerns about the lack of transparency in financial accounting, Congress passed a new law called: A) COT (Corporate Openness Now). B) Principles of Corporate Governance. C) Sarbanes-Oxley Act. D) Securities and Exchange Act.

Sarbanes-Oxley Act.

37. Which of the following is not an example of fulfilling social objectives through stock ownership? A) Selling stock of companies that did business in South Africa when it had a policy of racial discrimination. B) Divesting from Chinese companies that made products by forced labor. C) Selling stock of companies with a below-market rate of return. D) Not investing in Burmese companies that had been accused of human rights abuses.

Selling stock of companies with a below-market rate of return.

26. How are directors of boards selected? A) Shareholders elect the directors from a list of candidates. B) The company's CEO appoints the directors. C) The nominating committee elects the directors. D) Shareholders with the greatest share in the company become directors.

Shareholders elect the directors from a list of candidates.

31. According to Barlow v. A.P. Smith Manufacturing: A) The law prohibited charitable contributions, at that time. B) Socially responsible actions are an investment in the future, thus an allowable expense. C) Socially responsible actions must be approved by a majority of the firm's stockholders. D) Charitable contributions were bad corporate investments for the short term.

Socially responsible actions are an investment in the future, thus an allowable expense.

28. The burden of responsibility for product performance has shifted to the producer, under the legal doctrine of: A) Strict liability. B) Product liability. C) Consumer liability. D) Supplier liability.

Strict liability.

36. What over the counter medicine is used to make methamphetamine A) Tylenol B) Nyquil C) Sudafed D) Nightall

Sudafed

26. Which of the following is not an example of the charity principle? A) Endowing public libraries. B) Supporting settlement houses for the poor. C) Supporting a governmental protection agency. D) Donating money to a family-counseling center.

Supporting a governmental protection agency.

23. A modern day expression of the charity principle does not include: A) Balancing the interests and needs of many diverse groups in society. B) Expressions of corporate philanthropy. C) Voluntary actions to promote the social good. D) Taking a paternalistic approach to community affairs.

Taking a paternalistic approach to community affairs.

38. Johnson and Johnson's response to the Tylenol incident in the 1980s is an example of: A) Maximizing short term profits. B) Taking a short term loss for a long run benefit. C) Poor uses of charitable resources. D) Poor crisis management.

Taking a short term loss for a long run benefit.

27. Which of the following was not a reason for the wealthy to be philanthropic in the early 20th century: A) Good publicity. B) Serving as "my brother's keepers". C) Tax provision. D) Well publicized contest between the super wealthy.

Tax provision

21. Consumers have become more dependent on businesses for product quality because: A) The complexity of products makes choices complicated for consumers. B) Instructions for use or care of product are provided in clear and simple language. C) Their technical competence allows them to inspect the products thoroughly. D) Competition has forced manufacturers to market lower-quality goods.

The complexity of products makes choices complicated for consumers.

17. Which of the following is not true about institutional investors? A) Institutions invest the funds of individuals by purchasing shares of stock in corporations. B) The proportion of institutional ownership of stock in the U.S. has declined slowly since the 1960s. C) The government is an institutional investor. D) Institutions accounted for 75 percent of the value of all equities owned in the U.S. in 2007.

The proportion of institutional ownership of stock in the U.S. has declined slowly since the 1960s.

19. Which of the following consumer products is not a consumer right? A) The right to be protected. B) The right to be informed. C) The right to choose. D) The right to privacy.

The right to be protected.

32. Stock options can best be described as: A) The right to buy a company's stock at the price at incorporation. B) The right to buy a company's stock at a strike price for a certain period. C) The obligation to buy a company's stock at the price at incorporation. D) The obligation to buy a company's stock at a strike price for a certain period.

The right to buy a company's stock at a strike price for a certain period.

17. Which of the following is (are) provisions for consumers under the consumer bill of rights? A) The right to safety. B) The right to be represented. C) The right to purchase. D) All of the above.

The right to safety.

21. Modern corporations should be socially responsible because: A) They are responsible to the stockholders of the company. B) They create jobs, influencing the lives of employees. C) They are highly profitable. D) All of the above.

They create jobs, influencing the lives of employees.

21. The directors of a company are a central factor in corporate governance because: A) They establish corporate objectives and develop broad policies. B) They have the highest stake in the performance of the company. C) They have a moral responsibility to fulfill the needs of both the company's employees and customers. D) They inherited the business from their predecessors.

They establish corporate objectives and develop broad policies.

17. Which of the following is true of General Motors in 2009. A) They were not a top 10 company with regard to revenue. B) They were a top 10 in profits. C) They were a top 10 company in revenue even though they lost money. D) None of the above

They were a top 10 company in revenue even though they lost money.

29. According to the doctrine of strict liability, which of the following statements is not true? A) It is not necessary for consumers to prove negligence or breach of warranty by the producer. B) The consumer's own negligence is not an acceptable defense by the manufacturer. C) Manufacturers can be held liable if a product is inherently dangerous. D) This doctrine extends only to those involved in supplying parts for the final product.

This doctrine extends only to those involved in supplying parts for the final product.

42. What company installed a wind turbine in the Dominican Republic? A) LaPlata. B) Timberland. C) Microsoft. D) Constellation Energy.

Timberland.

26. Which of the following is a mission of the Food and Drug Administration? A) To assure the safety and effectiveness of a wide range of consumer products. B) To prohibit unfair or deceptive advertising. C) Toxic chemicals research. D) Inspection of meat, poultry, seafood, and produce.

To assure the safety and effectiveness of a wide range of consumer products.

19. Which if the following is not a legal right of stockholders: A) To vote on members for the board of directors. B) To vote on major mergers and acquisitions. C) To vote on changes in the corporate charter. D) To vote on who will become chief executive officer (CEO).

To vote on who will become chief executive officer (CEO).

1. Corporate social responsibility implies that harm to people and society should be acknowledged and corrected if possible. A) True B) False

True

10. Critics of consumer privacy self-regulation by the industry fear that the industry rules would be too weak. A) True B) False

True

10. One reason for a corporation to behave responsible is to discourage government regulation. A) True B) False

True

10. The influence of the institutional sector of the stock market has grown over the past two decades. A) True B) False

True

11. Enlightened self-interest means that companies are socially aware without giving up their own economic self-interest. A) True B) False

True

12. Accompanying a firm's economic responsibility to its stakeholders are its legal obligations. A) True B) False

True

13. Huge product liability verdicts, though often well publicized, are the exception not the rule. A) True B) False

True

14. In 2009, shareholders at Pfizer voted themselves an advisory vote on executive compensation. A) True B) False

True

14. Putting all the emphasis on short-run maximum profits for stockholders can lead to policies that overlook the interests and needs of other stakeholders. A) True B) False

True

15. Gun liability law suits have not fared well in Courts: A) True B) False

True

15. The Center for Corporate Responsibility is based at Boston College A) True B) False

True

15. The second Bush administration cut staffing at the SEC. A) True B) False

True

2. Companies such as MTV and McDonalds use "nueromarketing" to better understand how to boost the effectiveness of advertising. A) True B) False

True

2. Pfizer pledged approximately $1.4 million for earthquake relief in China. A) True B) False

True

2. The government is considered an institutional investor. A) True B) False

True

3. After the fall of Communism, a consumer movement has blossomed in Central Europe. A) True B) False

True

3. Through the Microsoft Unlimited Potential Program, people living in developing countries can receive a stripped down version of Windows for free. A) True B) False

True

4. African American households are more likely to own stock than Hispanic households A) True B) False

True

4. Consumer advocacy groups in the United States actively promote and speak for the interests of millions of consumers. A) True B) False

True

6. The New York Stock Exchange requires listed companies to have a majority of outside directors on its Board of Directors. A) True B) False

True

7. According to the stewardship principle, businesses act as trustees and should consider the interests of all who are affected by business decisions and policies. A) True B) False

True

7. Countrywide mortgage was the largest mortgage lender in The United States until it collapsed in July, 2008. A) True B) False

True

7. Executive compensation is set by the Board of Directors. A) True B) False

True

8. A positive reputation allows a firm to attract a loyal customer base. A) True B) False

True

8. Executive compensation is substantially higher in the United States than in Germany. A) True B) False

True

9. A "cookie" is an identifying mark placed on a user's computer hard drive during visits to some Web sites. A) True B) False

True

9. A primary benefit of enlightened self interest is an enhanced reputation. A) True B) False

True

9. One study established that the higher the proportion of executive pay in stock options, the more likely a company must restate profits. A) True B) False

True

30. Many companies have argued that the evolution of strict liability has: A) Unfairly burdened them with excess costs. B) Decreased liability insurance rates. C) Increased corporate revenues and dividends. D) Changed top management's attitude about the consumer.

Unfairly burdened them with excess costs.

18. The revenues of Toyota Motors in 2009 was roughly equal to the entire economic output of: A) Venezuela B) Peru C) Spain D) Colorado

Venezuela

37. Which company was not recognized as a best corporate citizen in every year since 2009. A) Starbucks. B) Whole Foods. C) Intel. D) Cisco Systems.

Whole Foods

20. Corporations have a role in establishing their community's: A) Tax base. B) Safety. C) Economic growth. D) All of the above.

economic growth

42. Bernie Madoff's victims lost approximately A) fifty billion dollars B) fifty five billion dollars C) sixty billion dollars D) sixty five billion dollars

sixty five billion dollars