GENB
As Joseph A. Schumpeter explained, innovation results in: a. "Creative destruction" whereby established markets are replaced by new product and service offerings b. Efficient markets characterized by high levels of competition c. Concentrated monopolies d. High transaction costs
a. "Creative destruction" whereby established markets are replaced by new product and service offerings
Susan has patented a high technology invention and wants to start a company to commercialize the invention. She has interviewed Attorney A to represent her company and learned that this attorney has significant experience coaching entrepreneurs, licensing technologies in her field and has many important contacts in the venture capital community. Attorney A has the potential to: a. Act as a strategic partner to create value b. Focus exclusively on legal matters c. Focus exclusively on business issues d. None of these are correct
a. Act as a strategic partner to create value
Josh wants to ensure that anyone employed by his Florida-based startup won't leave to start their own competing businesses. He requires new employees to sign a non-compete agreement and stipulates Florida as the forum selection clause. One employee has challenged the non-compete in her place of residence in New York. The New York courts have found that the non-compete is inconsistent with New York law. This means that: a. All, or some aspects of the non-compete will not be enforced b. The non-compete will be fully enforced c. Another court in another state will decide the matter d. None of these are correct
a. All, or some aspects of the non-compete will not be enforced
A new business has been formed and anticipates raising equity investment from more than 100 investors, several of which will be venture capital funds. The business is not seeking pass-through taxation, will issue various classes of stock, and offer limited liability to all investors. The most suitable form of entity is a: a. C corporation b. S corporation c. Limited liability company d. General partnership
a. C corporation
John has started a company that will raise venture capital, and anticipates that ownership interests in the business will be widely held and will be provided to employees. The most suitable form of entity is a: a. C corporation b. S corporation c. Limited liability company d. Benefit corporation
a. C corporation
The law and the legal system can be a positive force that helps entrepreneurs: a. Create options b. Exploit legal loopholes c. Evade regulations d. All of these are correct.
a. Create options
The governance of a corporation is in most cases determined by the: a. Domicile of the entity, e.g. the state in which it was incorporated b. Residence of the Board of Directors c. Residence of the CEO d. None of these are correct.
a. Domicile of the entity, e.g. the state in which it was incorporated
Ted's start-up relies on copyrighted works that can be commercially exploited through licensing. The use of copyrights and licensing in this case is an example of: a. How the law offers a variety of tools that legally astute entrepreneurs can use to grow a business and increase value b. How property rights confer an unfair advantage c. How the law helps entrepreneurs manage risk d. None of these are correct
a. How the law offers a variety of tools that legally astute entrepreneurs can use to grow a business and increase value
Robert is a venture capitalist and is deciding whether to invest in NewCo. Several key technologies developed by NewCo originated from its founders and they will be key to the company's future success. Robert is worried that some of the founders will leave the company shortly after incorporating. How can Robert minimize this risk: a. Impose vesting requirements on each of the founder's stock b. Issue common stock without vesting requirements c. Issue preferred shares without vesting requirements d. All of these are correct
a. Impose vesting requirements on each of the founder's stock
Julie is the CEO of a leading yet mature company in the automotive industry. Her company's sales growth has been steadily declining the past few years. To stimulate growth, Julie may have to: a. Invest in new product offerings that cannibalize existing sales of legacy products b. Sell the company to the highest bidder c. Issue a stock repurchase plan to raise the stock price d. Make overly optimistic statements to investors
a. Invest in new product offerings that cannibalize existing sales of legacy products
Courts have generally found the following time restriction to be reasonable in a non-compete: a. Less than 1 year b. 1-2 years c. 2-3 years d. More and 5 years
a. Less than 1 year
All of the following are valuable services that an attorney can provide, except: a. Offering legal advice on every single aspect of the business' legal issues b. Pointing out issues that the entrepreneur may not have considered c. Introduce entrepreneurs to sources of capital and board members d. Handle legal matters that arise as the business grows
a. Offering legal advice on every single aspect of the business' legal issues
Sharon keeps accurate and detailed notes and records related to her business and provides these to her attorney. She also keeps a running list of her legal questions and concerns to discuss with her attorney whenever they meet. Sharon is working cost effectively with her attorney through: a. Organization b. Drafting c. Being proactive d. All of these are correct
a. Organization
Non-time related expenses may include all of the following, except: a. Paralegal's work b. Photocopying c. Filing fees d. Travel
a. Paralegal's work
Unlike the founders and other employees, venture capital investors usually acquire: a. Preferred stock b. Treasury stock c. Convertible stock d. Common stock
a. Preferred stock
Pedro is a neurologist who is subject to a non-compete with his employer, a Hospital. The restrictions on Pedro after he leaves the hospital prevent him from practicing neurology for 1 year anywhere within a 20 mile radius from the Hospital. This non-compete is likely: a. Reasonable in terms of scope, duration and geographical restrictions b. Unreasonable because of its scope c. Unreasonable because of its duration d. Unreasonable because of its geographical restrictions
a. Reasonable in terms of scope, duration and geographical restrictions
Investors in NewCo want to discourage outsiders from making offers to purchase shares in the company and ensure that they will retain equal percentage ownership rights if any of the current stockholders decide to sell their interest in the company. Which of the following techniques would best achieve these goals? a. Right of first refusal b. Repurchase rights c. Buy-sell agreement d. Co-sale agreement
a. Right of first refusal
A corporation is a distinct legal entity owned by: a. Shareholders b. At least two partners c. One person d. Members
a. Shareholders
All of the following are types of partnerships, except: a. Sole partnership b. General partnership c. Limited partnership d. Limited liability partnership
a. Sole partnership
The operating rules of the company, for example the rule stipulating the number of directors in the company, are set forth in a document called: a. The bylaws b. The articles of incorporation c. The corporate charter d. The operating agreement
a. The bylaws
John has an idea for a technology start-up. Before he plunges in, he decides it would be wise to determine if anyone else has legal rights to the idea by conducting a patent search. This is an example of: a. Using legal tools to manage risk b. Using legal tools to create value c. Using legal tools to capture value d. None of these are correct
a. Using legal tools to manage risk
A nondisclosure agreement prohibits employees from: a. Using or disclosing any of the employer's trade secrets b. Competing with the former employer for some period of time c. Engaging in any business activities unrelated to the employee's job d. Recruiting former coworkers to join the new enterprise
a. Using or disclosing any of the employer's trade secrets
All of the following are legitimate employer interests that can be protected with a non-compete, except: a. Trade secrets b. A general interest in restricting competition c. Customer lists d. Business reputation
b. A general interest in restricting competition
A partnership is a business carried on by a. Shareholders b. At least two partners c. One person d. Members
b. At least two partners
Once appointed, the ________ then usually adopts the bylaws, elects officers, authorizes the issuance of stock to the founders, establishes a bank account and authorizes payment of corporate expenses. a. CEO b. Board of directors c. CFO d. Promoter
b. Board of directors
Most large business organizations operate as: a. Partnerships b. C corporations c. Limited liability companies d. Sole proprietorships
b. C corporations
A covenant not to compete prohibits employees from: a. Using or disclosing any of the employer's trade secrets b. Competing with the former employer for some period of time c. Engaging in any business activities unrelated to the employee's job d. Recruiting former coworkers to join the new enterprise
b. Competing with the former employer for some period of time
When an attorney receives a fixed payment, or a certain percentage of potential cash flows when a certain event occurs, this is called a: a. Flat fee b. Contingent fee c. Deferred fee d. Retainer
b. Contingent fee
The founders of Company X have the option to incorporate in either California or Delaware. One of the founders wants to exchange future services as consideration for stock in the company. Where should the founders incorporate? a. California b. Delaware c. Any state the founders choose d. All of these are correct Hide Feedback
b. Delaware
Juan prepares a patent application draft ahead of time to share with his patent attorney so they can begin the patent application process. Juan is working cost effectively with his attorney through: a. Organization b. Drafting c. Being proactive d. All of these are correct
b. Drafting
To qualify for S corporation status, the entity must: a. Be a foreign corporation b. Have no more than 100 shareholders c. Have several classes of stock d. None of these are correct.
b. Have no more than 100 shareholders
Delaware is chosen by many companies as the state of formation because of the following, except: a. It has a favorable and well-developed body of corporate law b. It is less expensive relative to other states c. It can be advantageous from an administrative perspective d. It has a specialized and very experienced court system
b. It is less expensive relative to other states
John is the sole shareholder of a taxi cab company registered as an S corp. Which of the following would allow a court to potentially pierce the corporate veil and allow a creditor to reach John's personal assets to satisfy the corporation's liabilities: a. John properly capitalizes the corporation b. John co-mingles personal and corporate funds c. John conducts annual shareholder meetings and regular board meetings d. John makes sure corporate assets are never used for personal reasons
b. John co-mingles personal and corporate funds
John is ready to launch his own venture and is considering whether to hire an attorney to handle initial legal matters. Which of the following is the best approach towards resolving these initial legal matters: a. John should avoid the cost of hiring an attorney and rely solely on published legal guides and forms b. John should seek a legally astute lawyer with experience advising startups c. John should learn about the legal issues and resolve the matters on his own d. None of these are correct
b. John should seek a legally astute lawyer with experience advising startups
A start-up may face regulations that prevent it from competitively entering a market. In these cases, a start-up: a. Must concede to the regulations and fail to enter the market b. May work with regulators and seek to lobby or change regulations c. Should avoid regulations and hope for the best result d. Should look for jurisdictions with more favorable regulations
b. May work with regulators and seek to lobby or change regulations
Maria is a Board member of Z Corp. and is thinking about starting a competing business. Which of the following activities can Maria undertake while she is still employed by Z Corp.? a. Soliciting Z Corp. employees b. Preparing for the venture as long as it does not interfere with job responsibilities or fiduciary duties c. Operating the competing venture d. All of these are correct
b. Preparing for the venture as long as it does not interfere with job responsibilities or fiduciary duties
Investors in NewCo want to have the ability to repurchase vested shares from employees who depart the company. Which of the following techniques would best achieve these goals? a. Right of first refusal b. Repurchase rights c. Buy-sell agreement d. Co-sale agreement
b. Repurchase rights
All of the following are good techniques for finding a suitable lawyer for a new venture, except: a. Ask friends, colleagues and other entrepreneurs for referrals b. Run a general Internet search c. Attend classes, conventions and meetings to meet and evaluate potential attorneys d. Contact the state bar association, local chamber of commerce and local bar associations
b. Run a general Internet search
Susan and Martin are siblings starting a closely-held family business with less than 100 relatives who will be shareholders. They anticipate not needing to raise venture capital, will not provide equity incentives to employees, expect the business to be profitable and plan to distribute substantially all of its profits to the shareholders. The company will issue only one class of stock. The most suitable form of entity is a: a. C corporation b. S corporation c. General Partnership d. Limited Liability Company
b. S corporation
Legal fees can be structured as follows, except: a. Hourly fees b. Subscription fees c. Flat fees d. All of these are correct.
b. Subscription fees
Intellectual property protection, nondisclosure agreements, assignments of inventions and, covenants not to compete and license agreements are most likely related to which support activity in the value chain: a. Firm infrastructure b. Technology development c. Procurement d. None of these are correct.
b. Technology development
The following are traits of a successful entrepreneur, except: a. The willingness to take risks b. The inability to learn from mistakes c. The ability to manage risk by conducting experiments d. The ability to pivot when new information becomes available
b. The inability to learn from mistakes
StartUpCo hires Tim to join as a skilled software engineer. During the weekends, Tim starts a competing company to take advantage of opportunities that are not being captured by StartUpCo. Which of the following statements best represents the legal outcome of Tim's actions: a. Tim does not owe a duty of loyalty to StartUpCo because he is not a member of the Board of Directors b. Time owes a duty of loyalty to StartUpCo because he is a skilled employee c. Tim owes a duty of loyalty to StartUpCo because all employees owe their employer a duty of loyalty at all times d. Tim does not owe a duty of loyalty to StartUpCo because he is not the company's CEO
b. Time owes a duty of loyalty to StartUpCo because he is a skilled employee
If Philip requires fast turn-around times and prefers an attorney who has access to many other specialists, the best type of firm to represent his company would be: a. A solo practitioner b. A small boutique firm c. A large law firm d. Online legal resources
c. A large law firm
Marsha has met with two attorneys. Attorney A works at a large prominent law firm and charges a lower hourly fee, has little experience in Marsha's area of business and takes several days to return phone calls. Attorney B charges a slightly higher hourly rate, has direct experience in Marsha's area of business and replies promptly. Marsha should hire: a. Attorney A because of the firm's reputation b. Attorney A because it is cheaper c. Attorney B because this person is a better fit for Marsha's needs d. None of these are correct
c. Attorney B because this person is a better fit for Marsha's needs
The bulk of costs related to legal expenses come from: a. Photocopying b. Online research through legal subscription services c. Attorney's and paralegal's time d. Filing fees
c. Attorney's and paralegal's time
Jill frequently updates her attorney about business developments and she frequently reads blogs and trade articles related to her business that involve cutting-edge legal issues and forwards these to her attorney. Jill is working cost effectively with her attorney through: a. Organization b. Drafting c. Being proactive d. All of these are correct
c. Being proactive
The owners of a small private family business want to incorporate and keep ownership strictly among family members in the event one of the family members wants to sell their stock. Which of the following techniques would best achieve these goals? a. Right of first refusal b. Repurchase agreement c. Buy-sell agreement d. Co-sale agreement Hide Feedback
c. Buy-sell agreement
John and Sonny are co-owners of a private business and are looking at locations for the purpose of incorporating. They are both California residents and nearly all of the company's business is located in the state. Where should they choose to incorporate? a. Any state they deem best suited for this purpose b. Delaware c. California d. All of these are correct
c. California
Angela is an engineer who has a patent on a promising technology. She has been invited to join a startup whereby she will be given stock in exchange for transferring ownership of the patent to the startup. Angela is worried that the startup might not be successful. How can she limit the risk of transferring the patent to this startup? a. Condition the transfer until funding has been assured b. License the patent to the company with a right to terminate the license if the company fails c. Condition the transfer until funding has been assured and license the patent to the company with a right to terminate the license if the company fails d. None of these are correct
c. Condition the transfer until funding has been assured and license the patent to the company with a right to terminate the license if the company fails
Sarah started a company that has yet to generate any cashflows and she lacks investment capital and no access to capital. The best arrangement for structuring her legal fees at this point is: a. Flat fees b. Hourly fees c. Deferred fees d. Retainer
c. Deferred fees
John is the newly hired Human Resources Manager for a fast-growing start-up. In this role, John will be responsible for training, hiring and firing key personnel. The area of law that John would likely need to focus on is: a. Antitrust limits on exclusive dealings b. Strict product liability c. Employment law and contracts d. Securities regulation
c. Employment law and contracts
A no-moonlighting clause prohibits employees from: a. Using or disclosing any of the employer's trade secrets b. Competing with the former employer for some period of time c. Engaging in any business activities unrelated to the employee's job d. Recruiting former coworkers to join the new enterprise
c. Engaging in any business activities unrelated to the employee's job
The value proposition is: a. The ability to price discriminate b. Another term for a marketing strategy c. Focusing on customer's needs and the relative price they will pay for a feature or service d. The ability to sell products at the lowest possible price
c. Focusing on customer's needs and the relative price they will pay for a feature or service
Marcos launched a small business by inventing, patenting and commercializing a new hand tool. Big Co. has produced a cheaper knock-off version of the tool and is violating Marcos' patent. Litigating a patent will cost at minimum several hundreds of thousands of dollars, which Marcos cannot afford. In this situation, Marcos can: a. Hire a litigator from a large law firm who will assemble a large and highly qualified team and charge hourly fees b. Hire a litigator from a small law firm who will charge hourly fees c. Hire a litigator who will agree to a contingent fee structure and require payment only if Marcos obtains a settlement or jury verdict d. Save the cost of hiring a lawyer by representing himself in court
c. Hire a litigator who will agree to a contingent fee structure and require payment only if Marcos obtains a settlement or jury verdict
If a court finds that a legally valid non-compete has been breached the court may: a. Issue an injunction b. Award damages c. Issue an injunction and award damages d. None of these are correct.
c. Issue an injunction and award damages
Toby and Keith are planning to create and jointly own a company that will license their patented technology solely for royalties and will not create their own products for sale. Earnings would be distributed to these two owners, rather than retained to grow the business with the view toward selling it or taking it public. These investors want limited liability and do not anticipate raising capital from any other investors. The most suitable form of entity is a: a. C corporation. b. S corporation c. Limited liability company d. Limited partnership
c. Limited liability company
Kelly is starting a new biotechnology company that will operate at a loss for various years. The 100 + individual investors in this venture would like to benefit from the tax implications of these losses. They would also like limited liability and the ability to create various classes of stock. The most suitable form of entity is a: a. C corporation. b. S corporation. c. Limited liability company. d. General partnership.
c. Limited liability company.
The best type of legal billing arrangement for a startup is: a. Daily b. Semi-annually c. Monthly d. Yearly
c. Monthly
Allison is interested in registering her new business as a corporation under the name Notary On the Go, Corp. She checks with the Secretary of State in her jurisdiction and obtains clearance to register her corporation under that name. Can Allison freely begin to market her notary services using the Notary on the Go name? a. Yes, since the Secretary of State registered her corporation under that name b. Yes, since it is a very distinctive name c. No, since others may already have prior use to that trademark d. None of these are correct
c. No, since others may already have prior use to that trademark
A sole proprietorship is a business owned by: a. Shareholders b. At least two partners c. One person d. Members
c. One person
Experienced legal counsel's value extends towards all of the following types of expert advice during the formation stage, except: a. Choosing the appropriate capital structure b. Allocating ownership among the founders c. Preparing basic documentation d. Adopting appropriate equity incentive programs
c. Preparing basic documentation
Sam is planning to leave his employer to start a new business that will produce complementary products. All of the following are strategies for leaving on good terms, except: a. Being honest with the employer about the real reasons for leaving b. Offer the employer the opportunity to invest in the new venture c. Soliciting co-workers from his employer d. Return all confidential information and trade secrets upon leaving the company
c. Soliciting co-workers from his employer
As the CEO of a start-up, Maria exhibits: an attitude that the law can be used to create value, a proactive approach to solving legal problems, an informed judgement, context-specific knowledge of the law and seeks advice from strategically astute lawyers. Maria exhibits: a. The systems approach to law and strategy b. A risk taker attitude c. The dynamic capability of legal astuteness d. None of these are correct
c. The dynamic capability of legal astuteness
Pedro is a neurologist who is subject to a non-compete with his employer, a Hospital. The restrictions on Pedro after he leaves the hospital prevent him from practicing neurology for 5 years anywhere within a 20 mile radius from the Hospital. This non-compete is likely: a. Reasonable in terms of scope, duration and geographical restrictions b. Unreasonable because of its scope c. Unreasonable because of its duration d. Unreasonable because of its geographical restrictions
c. Unreasonable because of its duration
Each of the following are hard questions that must be addressed to minimize future disputes when it comes time to formalize the relationship among the owners, except: a. Who will own what percentage of the business? b. Who will be in the position of control? c. Whether to file for patent protection? d. What happens if a founder quits?
c. Whether to file for patent protection?
Susan is a skilled employee at ABC Co. She has started a non-competing side business on her own spare time without using any of ABC Co.'s resources, has not used any of ABC's trade secrets and has not recruited any of ABC Co.'s employees. Which of the following may prevent Susan from starting her business: a. A non-compete clause b. A non-solicitation clause c. A non-disclosure agreement d. A no-moonlighting clause
d. A no-moonlighting clause
A written partnership agreement can prevent future misunderstandings by: a. Including the term of the partnership's existence b. The division of profits and losses c. The duties of partners d. All of these are correct
d. All of these are correct
Although laws differ from state to state, the certificate of incorporation normally sets forth the following: a. The name of the corporation b. The business purpose of the corporation c. The authorized capital of the corporation d. All of these are correct
d. All of these are correct
Amy is in the process of finding an attorney to represent her new business. Which of the following would be appropriate steps that would lead her to find a suitable attorney: a. Amy should decide whether she wants to work with a small or large law firm b. Amy should interview as many attorneys as possible c. Amy should obtain references and speak with entrepreneurs who have worked with the attorney d. All of these are correct
d. All of these are correct
Barbara and Phil are college students who have entered a business plan competition. To avoid a commercial dispute, they should consider an agreement that: a. States each student has a nonexclusive right to pursue a venture based on the plan b. Grants each other a nonexclusive right to use the information in the plan c. States how they will allocate any winnings if the plan wins the competition d. All of these are correct
d. All of these are correct
Individuals start businesses for which of the following reasons: a. To be their own boss b. To pursue a passion c. To help those less advantaged d. All of these are correct
d. All of these are correct
James just started a new business and recently hired away some key sales representatives from Competitor Corp. to access their specialized knowledge and client lists. All along, James knew these representatives were under a non-disclosure and non-compete contract with Competitor Corp. What legal claim(s) can Competitor Corp. assert? a. Tortious interference with contracts against James b. Contract breach against the representatives c. Trade secret theft against the representatives and James d. All of these are correct
d. All of these are correct
John is an entrepreneur who wishes to follow the Systems Approach to Law and Strategy. He should therefore consider: a. The public law b. The competitive environment c. The firm's resources d. All of these are correct
d. All of these are correct
John is thinking about starting a new business that will generate new technologies by employing a team of skilled software engineers. To protect the information generated by his new company as much as possible, John should: a. Require the engineers to sign reasonable covenants not to compete b. Require the engineers to sign non-solicitation agreements c. Require the engineers to sign non-disclosure agreements d. All of these are correct
d. All of these are correct
John manages a business in a state that requires consideration to support a non-compete. John is worried some of his most valuable employees will leave to start a competing business. What type of consideration can John offer to make the non-compete enforceable against his employees? a. Additional payments b. Stock grants c. A promotion d. All of these are correct
d. All of these are correct
Mary is joining a startup as a minority owner and is being asked to sign a non-compete and non-disclosure agreement. Maria thinks it would be a good idea to ask for an employment agreement to: a. Protect herself against the whims of the other cofounders and investors b. Obtain cash through severance in the event of her dismissal c. Obtain additional stock vesting d. All of these are correct
d. All of these are correct
To be legally enforceable, a non-compete must: a. Be ancillary to some other agreement b. Supported by adequate consideration c. Designed to protect a legitimate interest d. All of these are correct
d. All of these are correct
Tom is starting a consulting business as a C corporation and wants to register it as Nova Consulting and plans to market and brand the company's services under that same name. Which of the following would help to ensure proper use of the name? a. Checking the name availability at the Secretary of State in the states where the company is expected to do business b. Doing a trademark search c. Acquiring the Nova Consulting domain name d. All of these are correct
d. All of these are correct
A strategically astute attorney can enhance the bottom line of the enterprise by: a. Helping craft the best structure for the business b. Providing sound advice regarding the legality of various possible courses of action c. Acting as a sounding board for both business and legal issues d. All of these are correct.
d. All of these are correct.
A strategically astute attorney can help the management team: a. Identify and seize opportunities b. Marshal and deploy resources c. Manage risk d. All of these are correct.
d. All of these are correct.
After selecting the form of organization best suited to the new business, the entrepreneur's next important step is to solidify the relationship among the founders by structuring the ownership of equity to: a. Protect the rights of each founder b. Provide incentives for hard work c. Divide the rewards fairly d. All of these are correct.
d. All of these are correct.
Before starting a business, an entrepreneur should consider the following sacrifices: a. Professional b. Financial c. Personal d. All of these are correct.
d. All of these are correct.
By carefully considering the forms of business entity and choosing the most appropriate one, entrepreneurs can: a. Reduce exposure to liabilities b. Minimize taxes c. Ensure the business is capable of being financed and conducted efficiently d. All of these are correct.
d. All of these are correct.
The failure to comply with the law as the rules of the game can result in: a. Crippling lawsuits b. Devastating fines c. Imprisonment d. All of these are correct.
d. All of these are correct.
The law may impact the following value chain activities: a. Marketing and sales b. Human resource management c. Inbound logistics d. All of these are correct.
d. All of these are correct.
To be legally enforceable, a non-compete must be reasonable in terms of: a. Scope b. Geography c. Duration d. All of these are correct.
d. All of these are correct.
Which of the following would comprise a material event that would affect the value of a company's stock? a. Receiving a term sheet for closing a financing b. Signing a major contract c. Experiencing significant growth in revenue d. All of these are correct.
d. All of these are correct.
A venture capitalist wants to participate in the sale of a shareholder's controlling interest in the event that shareholder decides to sell their stock. Which of the following techniques would best achieve these goals? a. Right of first refusal b. Repurchase agreement c. Buy-sell agreement d. Co-sale agreement
d. Co-sale agreement
The stock initially issued to the founders is almost always: a. Preferred stock b. Treasury stock c. Convertible stock d. Common stock
d. Common stock
All of the following are related to legal astuteness, except: a. A set of value-laden attitudes b. A proactive approach c. Advice from strategically astute lawyers d. Delegating important legal questions entirely to attorneys
d. Delegating important legal questions entirely to attorneys
Fred is the founder and CEO of a company. In this role, Fred has the unique ability to: foresee market trends ahead of competitors, seize these opportunities with savvy investments in people and resources, and the ability to protect these investments through patents, contracts and marketing. Fred has created competitive advantage by developing: a. A value chain b. A value proposition c. A risk management approach d. Dynamic capabilities
d. Dynamic capabilities
John started his own company. He most likely started it while: a. In school b. Right out of school c. In between jobs d. He was employed by a more established company
d. He was employed by a more established company
A new business has been formed and anticipates raising equity investment from more than 100 individual investors, none of whom are venture capital funds. The business is seeking pass-through taxation, various classes of stock, and limited liability to all investors. The most suitable form of entity is a: a. C corporation b. S corporation c. Benefit corporation d. Limited liability company
d. Limited liability company
Marsha is starting an accounting firm with several other accountants. She wants to obtain pass-through taxation, participate actively in the business and be limited in her liability for the misdeeds of the other accountants to extent of the business' assets. The State requires her to remain liable, however, for the full amount of any of her own misdeeds. The most suitable form of entity is a: a. C corporation b. S corporation c. Limited partnership d. Limited liability partnership
d. Limited liability partnership
A nonsolicitation clause prohibits employees from: a. Using or disclosing any of the employer's trade secrets b. Competing with the former employer for some period of time c. Engaging in any business activities unrelated to the employee's job d. Recruiting former coworkers to join the new enterprise
d. Recruiting former coworkers to join the new enterprise
An upfront payment requested by an attorney is called a: a. Flat fee b. Contingent fee c. Deferred fee d. Retainer
d. Retainer
Pam's start-up company produces high-end cosmetics. The market has not reacted favorably to her product line. After listening to customer testimonials, she decided to change her approach and develop interactive software that assists customers apply the cosmetics they already own. Pam demonstrated: a. Legal astuteness b. Dynamic capabilities c. A systems approach to law d. The ability to pivot
d. The ability to pivot
Each of the following is a primary consideration in the choice of business entity, except: a. The degree to which the founders' personal assets are protected from liabilities of the business b. The availability of favorable tax strategies c. The desirability for potential investors and lenders d. The entrepreneur's lifestyle
d. The entrepreneur's lifestyle
Joe is thinking about launching a new restaurant. Susan is thinking of launching a new clothing line. Both entrepreneurs will likely have to address the following similar legal issues, except: a. Whether to incorporate or use some other form of organization b. Whether to rely on intellectual property such as trademarks and trade secrets c. Deciding what types of contracts will be most important to the business d. Whether an alcohol license needs to be secured
d. Whether an alcohol license needs to be secured
