BLAW Final
A written agreement outlining the roles of partners, their rights, and their duties are called:
A partnership agreement
Puffery includes what kinds of activities?
Ads with exaggerated statements
Important business is conducted at the first meeting of the corporation and usually includes:
Election of the Board of Directors (if not already named in the Articles of Incorporation) Adoption of the Bylaws Adoption and ratification of any pre-incorporation contracts by promoters
Which of the following consumer credit acts examines lenders' practices regarding race, religion, national origin, color, gender, marital status, or age?
Equal Credit Opportunity Act (ECOA)
Which consumer protection law specifically provides for punitive damages?
Fair Credit Reporting Act
Partners have which of the following duties? Select 3 answers.
Fiduciary duties Record keeping Capital contribution
What must a party do before appealing an agency action in the court system? Choose 2 answer choices.
Must follow the agency appeal process & Must show direct harm.
Record Keeping:
Partners have a duty to provide information to the business for the purpose of record keeping and accounting.
Which of the following is a disadvantage of operating as a partnership?
Partners may suffer financial loss if the partnership is not profitable.
Capital contribution:
Partners must contribute all of the capital needs of the business, because the business cannot sell shares as a corporation does.
Use of Property of the Partnership:
Property acquired by the partnership is owned by the partnership and not the partners individually. Partners may not encumber the property to satisfy their own personal debts.
What is the difference between deceptive advertising and puffery? Choose 2 answer choices.
Reasonable people realize puffery is not meant to be taken literally, but they could be fooled by deceptive advertising. Deceptive advertising is prohibited; puffery is allowed.
When securities are being offered by a company only to residents of the state in which the company has its principal place of business, the securities may be exempted from registration under:
SEC Rule 147.
Any person who knowingly fails to include a material fact on a registration statement can be held liable under:
Section 11 of the Securities Act of 1933.
The formation of a partnership without a partnership agreement requires which of the following?
Sharing of profits and losses, Sharing of management duties, two or more people, who intend to do business together
Which of the following securities are exempt from registration because of their type? Choose 2 answer choices.
Short-term commercial paper Government securities
Juan wants to start a car washing business. Juan takes some car washing supplies from his house (a bucket, towels, and soap) and tells his neighbors he will wash their cars for $7. Which relationship is this?
Sole proprietorship
The Administrative Procedure Act (APA) is the federal law that does which of the following?
The APA sets out the rule-making process for administrative agencies.
Which of the following is required in the Articles of Organization for an LLC? Select 2 answers.
The name of the business, The principal place of business
A general partnership differs from a limited partnership in:
a partner's management rights. the documents required for creation.
Which of the following are among the five periods identified by the Securities and Exchange Commission (SEC) rules in the registration process? Choose 2 answers.
a pre-filing period a waiting period
What is the term for a court's determination that an administrative agency decision is the result of plain error or mistake?
abuse of discretion
To meet the standard for the duty of care, a person must:
act in good faith and with the judgment of an ordinarily prudent person.
Private Corporation
all other corporations that are not public corporations or publicly held corporations.
Publicly Held Corporation
any corporation the shares of which are publicly traded in a securities market (such as NASDAQ or the New York Stock Exchange).
What is the term given to an administrative decision that is unreasonable or implausible in light of the facts and evidence?
arbitrary and capricious
When a product is advertised for sale at a greatly reduced price, but the salesperson tries to get customers to buy a more expensive item instead, this is called:
bait and switch.
When an agency needs to enforce the law or its regulations, it may exercise which of the following powers? Choose 3 answers.
conduct a hearing to obtain a final order issue a subpoena investigate complaints and possible violations of its regulations or the law
The remedies available to injured consumers under federal and state consumer protection laws may include:
damages for actual injury or harm caused. punitive damages. attorney's fees and costs.
A corporate officer who buys or sells his or her company's stock based on non-public information may be committing which type of securities fraud?
insider trading
What are two functions of the Consumer Product Safety Commission (CPSC)? Choose 2 answers.
to ban the manufacture and sale of hazardous products, to set the safety standards for consumer products
In ordinary circumstances, when the corporate veil has not been pierced, a shareholder may be liable for:
unpaid amounts on the shares held by that shareholder.
Domestic Corporation-
when a corporation incorporates within a state, that home state refers to the corporation as a domestic corporation.
What information can people request under the Freedom of Information Act?
Agency budget information
What is the role of an administrative law judge (ALJ)?
An ALJ is an employee of the agency bringing the charges.
Which of the following statements correctly reflects the role of a federal administrative law judge (ALJ)?
An ALJ presides over an administrative hearing and issues an order that, when final, may be reviewed by a court.
Which of the following are qualities of a non-profit corporation?
It does not provide dividends to shareholders, Its goal is to earn a profit
Which statement is true about creating a sole proprietorship?
No documentation is required to create a sole proprietorship.
Which of the following is required to create a sole proprietorship?
Nothing
Which of the following consumer credit acts helps potential borrowers understand the cost of a loan?
Truth-in-Lending Act (TILA)
Which of the following is one of the elements of liability under Section 10(b) of the Securities Exchange Act of 1934?
Use of the mail or facilities of interstate commerce
Which of the following actions can the Federal Trade Commission (FTC) employ against unfair and deceptive advertising? Choose 2 answers.
cease and desist order counteradvertsing sanction
The Sarbanes-Oxley Act impacted corporate governance in which of the following ways?
enhanced penalties for securities fraud mandated internal controls for financial reporting increased corporate officer accountability
The role of a state's attorney general in handling complaints about potential violations of consumer protection laws is to:
ensure a safe and fair marketplace for the citizens of the state.
Any partner
may act as an agent who binds the partnership.
If a credit reporting agency fails to remove known errors in a consumer's credit report after request by the consumer, the agency:
may be required to pay damages to the consumer.
During the registration waiting period, an issuer may: (Choose 2 answer choices.)
offer to sell securities and distribute a preliminary prospectus.
Common shareholders have the right to vote on:
proposals for fundamental changes affecting the company such as mergers or liquidation.
The simplest form of business to establish is a:
sole proprietorship.
What documents spell out the powers of a corporation? Choose 2 answers.
the bylaws & the charter (also called the articles of incorporation)
A sole proprietorship differs from a limited liability company (LLC) in:
the documentation required for formation.
The formation of LLCs is governed by:
the laws of the state in which the LLC is created
Which of the following provisions are typically in a charter for a corporation? Choose 2 answers.
the name and address of the corporation's agent, the intended business purpose of the corporation
Where should Articles of Incorporation be filed?
with the state
What is the exhaustion doctrine?
A person may seek judicial review of an agency decision only after they have followed all agency procedures to obtain a remedy for their complaint and have obtained a final order from the agency.
Who may certify financial filings for the SEC?
CEO & CFO
Which of the following behaviors is prohibited under the FDCPA? Choose 2 answer choices.
Calling a consumer at 3 a.m. Notifying a consumer's neighbor that they are in debt
Inspection of the books:
Each partner has the right to inspect the books of the business.
Which of the following is a requirement for the initial formation of a corporation?
a charter
Public Corporation
a corporation formed by the government to meet a political or governmental purpose.
A shareholder has the right to inspect the corporate books, if done:
in good faith and for a proper purpose.
What type of corporation is formed for the purpose of doing a public service instead of making money?
nonprofit
A foreign corporation is:
one that was incorporated in a different state.
Which of the following is included in the definition of a security under the Securities Act of 1933? Choose 3 answers.
publicly traded stocks and bonds an investment contract that meets the Howey test stock options, puts, and calls
Blue sky laws apply to what type of securities transaction?
state-regulated securities offerings
Which of the following securities are exempt from registration under the Securities Act of 1933? Choose 3 answers.
tax-exempt bonds issued by a charitable organization federal government bonds a corporate promissory note with a term of 9 months or less
An operating agreement for a limited liability company:
typically includes provisions about choosing the LLC's management.
Compensation:
A partner generally does NOT have a right to compensation for his/her time, skill, and energy, because a partner's income comes from the distribution of profits. However, the partners can agree otherwise via a partnership agreement.
Agency
A partner may act as an agent on behalf of the partnership and bind the partnership, absent a partnership agreement that states otherwise.
Management:
All partners have an equal right to participate in the management of the business, unless a partnership agreement states otherwise
Which of the following issuers must register with the SEC under the Securities Exchange Act of 1934? Choose 2 answer choices.
Companies who trade on a national exchange Companies who complete a public offering
What remedies can consumers get from a debt collection agency for illegal treatment? Choose 3 answer choices.
Damages Attorney's Fees Court Costs
Which of the following should be approved by shareholders? Select 2 answers.
An acquisition of the company by another company or A dissolution of the corporation
The agency that oversees the credit practices of banks, mortgage lenders, and credit card companies is called the:
Consumer Financial Protection Bureau.
Officers and directors owe which of the following duties to the corporation? Choose 2 answer choices.
Duty of Loyalty & Duty of Care
Agency rules are similar to statutes because of which one of the following?
They are legal requirements and binding as if Congress has passed them
Which of the following does the SEC evaluate in a registration statement?
Whether appropriate disclosures have been made
Alien Corporation -
a corporation formed in another country is an alien corporation.
A corporation that is formed in one state but does business in another state is referred to in the second state as:
a foreign corporation.
which of the following actions are associated with the Consumer Financial Protection Bureau (CFPB)? Choose 2 answers.
collecting and tracking consumer complaints &writing and enforcing rules for financial institutions
Willful violation under Section 807 of the Sarbanes-Oxley Act may result in:
result in imprisonment for up to 25 years in addition to fines
A partnership in which the liability of all the partners is limited to the amount of their capital investment in the firm is called a:
limited liability limited partnership.
Which of the following is a duty of both corporate directors and corporate officers?
making a full disclosure of potential conflicts of interest
Which of the following are rights of common shareholders? Choose 3 answers.
voting on matters such as election of directors and proposals for mergers or liquidation opportunity to inspect corporate books and records transferable ownership
A consumer product is any article, or its component parts, produced or distributed for sale to a consumer:
for the consumer's own use or enjoyment.
Personal liability
Each partner is personally liable for the debts of the partnership unless they qualify as a limited partner, generally through joint and several liability, even if they did not know about or participate in the conduct giving rise to the debt.
A debt issued by a company as a negotiable instrument with a term of 9 months or less is a security that is exempt from registration and is called:
short-term commercial paper.
Who is liable for contracts entered into on behalf of the corporation before the corporation is formed?
the promoter
The legislation that requires an administrative agency to respond to requests from citizens for agency records is called the:
Freedom of Information Act (FOIA).
In addition to describing the securities being offered for sale, a registration statement must meet which of the following requirements? Choose 3 answers.
It must state how the corporation intends to use the proceeds from the sale of its securities. It must be filed with the Security and Exchange Commission (SEC) online. It must contain specific information about the company's management, assets, liabilities, and risk factors.
Which of the following statements explains the formation and purpose of a federal administrative agency?
Most federal administrative agencies are subject to the authority of the president, but some are independent. An administrative agency is formed by enabling legislation that also provides the authority to establish regulations that will implement and enforce the law.
For-Profit Corporations
intend to make a profit, and that profit is distributed to shareholders as a dividend at the discretion of the board of directors.
The judicial branch may limit an administrative agency's actions by which of the following? Choose 2 answers.
judicial review of the agency's orders on appeal , judicial review of the agency's regulations
The Securities and Exchange Commission (SEC) was established to perform which of the following functions?
protecting investors from fraud and misrepresentation in securities transactions regulating the securities market enforcing securities laws
Sharing of Profits and Losses
Each of the partners has a right to equally share in the profits and losses, unless a different arrangement has been made in a partnership agreement.
Fiduciary Duties
Each partner owes to the partnership and other partners the duty of care and the duty of loyalty.
Sadie runs a bakery and Tommy, her brother, often comes in to help Sadie fill orders. Because Tommy has always been good at business, Sadie also lets Tommy do the bookkeeping and handle all the contracts with vendors. Sadie does not pay Tommy a salary, but whenever Sadie takes a distribution from her profits Sadie gives Tommy a distribution too. What relationship does this represent?
Partnership
Which of the following are advantages of operating as a partnership?
Partnerships are not taxed, Forming a partnership is simple and relatively inexpensive.
What are the benefits of the exhaustion doctrine?
The exhaustion doctrine requires resolution of disputes within the agency without involving the court system, except when necessary.
In which of the following would the business judgment rule not help a manager escape liability? Choose 2 answer choices.
When they committed an illegal act or When they did not act in the best interests of the corporation
The Securities Exchange Act of 1934 controls the public trading of stocks in which of the following ways?
by creating the Securities and Exchange Commission (SEC), by requiring annual disclosures of financial information
Which of the following are sources of administrative law? Choose 3 answers.
executive orders agency opinions agency regulations
Any security must be registered before it can be sold, unless: (Choose 2 answer choices.)
the transaction qualifies for an exemption. the security qualifies for an exemption.