Ethical and Legal Issues in Business Practice Exam
Which of the following statements is correct?
A) Business ethics is not a real concept as the rules and ethics of everyday life don’t apply to the world of business.
B) Business ethics is the study of business situations, activities, and decisions where issues of right and wrong are addressed.
C) Business ethics cannot be defined as a real concept as it is an oxymoronic term.
D) Business ethics is concerned with the study of assessing the activities of a business based on their profitability.
The relationship between ethics and the law can be described as:
A) Incredibly close; in fact, in all instances, what is ethical is also what is legal and vice versa.
B) Not close; ethics and the law share a small amount of overlap, but fundamentally address differing questions and themes.
C) Close, as there is considerable overlap between ethics and law, but the two are not equivalent.
D) Not at all close; ethics and the law are virtually incompatible.
Businesses have _____ within society and have the potential to provide a ____ to society while ____ has the potential to inflict enormous harm on individuals, communities, and the environment.
A) Little power, Small contribution, Business malpractice
B) Little power, Major contribution, Corporate social responsibility
C) Huge power, Small contribution, Corporate social responsibility
D) Huge power, Major contribution, Business malpractice
Healthy eating, particularly relating to sugar and salt consumption, food and packaging waste, and supply chain CO2 emissions are all business ethics issues facing the ________.
A) Supermarket industry
B) Chemicals industry
C) Construction industry
D) Information and mobile technology industry
Which of the following organizational characteristics of small businesses tend to characterize their engagement with business-related issues?
A) Size and complexity, owner and family member influence on the organization, shareholder and stakeholder power
B) Lack of organizational resources, size and complexity, owner and family member influence
C) Informal relationships, owner and family member influence on the organization, lack of organizational resources
D) Bureaucratic and formal organizational structure, lack of organizational resources, conflicts of interest
The UK Public Services (Social Value) Act 2013 requires those procuring ______ to consider how they can secure wider _____, _____, and _____ benefits.
A) Private services, social, economic, and environmental
B) Public services, social, cultural, and environmental
C) Private services, cultural, economic, and environmental
D) Public services, social, economic, and environmental
_____ is a key driving force shaping the current and future state of business ethics, in particular regarding _____, ______, and _____ related issues.
A) Globalization, Cultural, Legal, Accountability
B) Nationalization, Cultural, Environmental, Accountability
C) Privatization, Cultural, Legal, Accountability
D) Globalization, Technological, Financial, Accountability
Sustainability can broadly be defined as:
A) The short-term maintenance of systems according to environmental, economic, and social considerations
B) The long-term maintenance of processes according to environmental, economic, and cultural considerations.
C) The short-term maintenance of systems according to environmental, political, and social considerations.
D) The long-term maintenance of systems according to environmental, economic, and social considerations.
The recent global sustainability agenda has been dominated by which of the following organizations’ sustainability goals?
A) Marks & Spencer’s ‘Plan A’
B) United Nations ‘Sustainable Development Goals’
C) The Alibaba Group’s ‘Sustainability Initiatives’
D) Unilever’s ‘Sustainable Living Plan’
The ________ perspective on sustainability resulted from growth models that analyzed the carrying capacity of the planet, overall concluding that the finite capacity of the earth and _______, ________, and _______ by current and past generations could reduce quality of life for future generations. This contrasts with the environmental perspective which focuses on the need to maintain and preserve the natural environment.
A) Economic, Overuse of resources, Overpopulation, Over pollution
B) Economic, Underuse of resources, Underpopulation, Unsustainability
C) Environmental, Underuse of resources, Overpopulation, Over pollution
D) Environmental, Overuse of resources, Underpopulation, Unsustainability
Which of the following is an example of a value?
A) Justice
B) Happiness
C) Security
D) All of the above
Most companies begin the process of establishing organizational ethics by developing:
A) Ethics training program
B) Code of conduct
C) Ethical enforcement mechanism
D) Hidden agenda
Which of the following is an example of an area where business ethics apply?
A) Conduct of international operations
B) Nowhere
C) In the personal life of staff
D) None of the above
A whistleblower is an employee who:
A) Exposes organizational wrongdoing.
B) Complains a lot to company management.
C) Engages in unethical behavior.
D) Refers disputes with other employees.
Which of the following statements is true about stress management?
A) Stress management is learning about the connection between mind and body
B) Stress management helps us control our health in a positive sense
C) Stress management teaches us to avoid all kinds of stress
D) Only ‘1’ & ‘2’ are right
Which of the following are the basic sources of stress?
A) The Environment
B) Social Stressors
C) Thoughts
D) All of the above
Examples of environmental stressors are:
A) Weather
B) Financial problems
C) Substandard housing
D) All are correct
The following are the characteristics of Positive Stress:
A) It improves performance
B) It feels exciting
C) It motivates
D) All of the above
Which of the following is the primary purpose of business ethics in the workplace?
A) To ensure that employees only make decisions that benefit their personal interests
B) To create a moral framework that guides the decisions and behavior of individuals within an organization
C) To provide legal protection for businesses from government intervention
D) To protect businesses from competition and ensure higher profits
A company that acts ethically ensures:
A) Their competitors are less successful
B) They prioritize the well-being of their stakeholders, including employees, customers, and the community
C) They always maximize profits at any cost
D) They follow the law, but ignore other ethical concerns
Which of the following is NOT a common challenge in implementing business ethics programs?
A) Employee resistance to changes in corporate culture
B) Lack of clear ethical guidelines and policies
C) Pressure from stakeholders to prioritize profitability over ethical considerations
D) Increased regulations and government interference
What does the term “conflict of interest” refer to in business ethics?
A) A situation where a company competes unfairly with others in the industry
B) When an individual’s personal interests or relationships interfere with their ability to make impartial business decisions
C) A disagreement between employees over ethical policies
D) A legal case involving a business and its stakeholders
Which of the following ethical principles focuses on ensuring fair and just treatment for all individuals in business dealings?
A) Utilitarianism
B) Justice
C) Virtue ethics
D) Deontology
Which ethical theory is most concerned with the consequences of actions and maximizing overall happiness or benefit?
A) Deontological ethics
B) Virtue ethics
C) Utilitarianism
D) Justice ethics
In which scenario would a business be most likely violating the ethical principle of transparency?
A) A company reports all financial earnings accurately
B) An organization hides critical information from the public about the safety of its product
C) A firm conducts regular employee training on ethical practices
D) A company discloses its charitable contributions to the public
Which of the following is a primary component of an organization’s code of ethics?
A) Specific financial targets for the year
B) A set of rules and guidelines that guide ethical behavior in the workplace
C) A marketing strategy to increase sales
D) An outline of how to evade taxes legally
What is the role of corporate social responsibility (CSR) in business ethics?
A) CSR ensures businesses are only focused on making profits and outperforming competitors
B) CSR focuses on businesses taking responsibility for the impact of their actions on society, the environment, and stakeholders
C) CSR is about increasing stockholder dividends
D) CSR focuses solely on legal compliance
Which of the following describes the concept of “whistleblowing” in business ethics?
A) Reporting a company’s unethical practices to a higher-level manager
B) A practice where employees make false allegations about the company to harm its reputation
C) The act of reporting illegal or unethical activities within an organization to outside authorities
D) Encouraging employees to remain silent in unethical situations
Which of the following is an example of ethical decision-making in business?
A) A company that does not hire workers based on their race or gender
B) A company that makes decisions based on short-term profit maximization
C) A business that ignores environmental sustainability in favor of higher output
D) A company that exploits workers by paying them below minimum wage
What is the “Golden Rule” in business ethics?
A) The idea that the most successful business decisions are those that involve the least risk
B) Treat others as you would want to be treated in similar circumstances
C) Profit is the ultimate goal, even if it requires unethical behavior
D) The idea that laws and regulations should always govern business behavior
What is the ethical significance of corporate governance?
A) Corporate governance ensures businesses can make any decision, regardless of its effect on stakeholders
B) It ensures that companies operate in a transparent, accountable, and ethical manner for the benefit of all stakeholders
C) Corporate governance only focuses on increasing a company’s profits
D) Corporate governance is about ensuring companies can evade legal consequences
Which of the following is an example of a company acting unethically?
A) Paying fair wages to employees
B) Increasing transparency with stakeholders
C) Discriminating against employees based on gender, race, or age
D) Implementing eco-friendly practices in the supply chain
What is the role of ethical leadership in business?
A) Ethical leadership ensures that employees act in the best interests of their employer, regardless of the consequences
B) Ethical leadership involves guiding employees to make decisions that align with both business goals and ethical standards
C) Ethical leadership involves ensuring employees focus on maximizing profits, even at the cost of ethical concerns
D) Ethical leadership is primarily about minimizing risks and reducing accountability
Which of the following describes the concept of “sustainable business practices”?
A) Focusing on short-term profits to the exclusion of long-term consequences
B) Using business practices that promote environmental sustainability and social responsibility without compromising future generations
C) Ignoring environmental impact to maximize production
D) Focusing on profitability at the expense of employee well-being
Which is a key advantage of ethical business practices?
A) Increased chances of legal penalties
B) Improved public perception and customer loyalty
C) A guaranteed increase in profits without competition
D) Reduced costs associated with compliance and transparency
Which of the following best describes the principle of “corporate transparency”?
A) Only disclosing positive information about a company’s performance
B) Hiding critical business information from the public to avoid negative attention
C) Ensuring that all stakeholders, including customers, employees, and investors, have access to relevant and accurate information about the company
D) Allowing competitors to access internal company data for the sake of competition
What is the key focus of business ethics when it comes to employee treatment?
A) Employees should only focus on making profits for the business
B) Employees should be treated fairly, with respect for their rights, dignity, and well-being
C) Employees should always be expected to work overtime without additional compensation
D) The only focus is to minimize employee complaints regardless of their treatment
Which of the following best represents the concept of “ethical sourcing” in business?
A) Choosing suppliers based solely on the cost of goods and services
B) Selecting suppliers based on their ethical practices, including fair labor standards and environmental responsibility
C) Choosing suppliers based on their ability to provide the lowest price, regardless of their business practices
D) Focusing on suppliers that can offer the fastest delivery times, even if they engage in unethical practices
Which ethical theory emphasizes the importance of following moral rules and duties, regardless of the consequences?
A) Consequentialism
B) Deontological ethics
C) Virtue ethics
D) Utilitarianism
A business that takes actions to reduce its environmental impact by reducing waste, conserving energy, and using renewable resources is practicing:
A) Ethical sourcing
B) Corporate social responsibility
C) Greenwashing
D) Tax avoidance
What does the term “greenwashing” refer to in business ethics?
A) A company’s genuine effort to promote environmental sustainability
B) The unethical practice of misleading consumers into believing a company is environmentally friendly when it is not
C) A form of marketing that emphasizes the environmental benefits of a product or service, without any false claims
D) The practice of reducing waste and carbon footprint through recycling programs
Which of the following is an example of ethical marketing in business?
A) Using misleading advertising to increase sales
B) Promoting a product with false claims about its quality or benefits
C) Ensuring that marketing messages are honest, clear, and accurately reflect the product’s features and benefits
D) Targeting vulnerable populations with manipulative advertising techniques
Why is the concept of fairness critical in business ethics?
A) It ensures that businesses always make profits regardless of the situation
B) It focuses on providing equal opportunities and just treatment for all employees and stakeholders
C) It allows companies to engage in unethical practices without legal consequences
D) It helps businesses avoid paying taxes and other legal obligations
Which of the following is a common ethical issue faced by multinational companies?
A) Ensuring that employees are paid above the minimum wage in every country they operate
B) Ignoring cultural differences and imposing the same business practices globally
C) Adhering to local laws and customs without considering the ethical implications
D) Ensuring ethical labor practices and respecting human rights across all operations globally
Which of the following is an example of a “conflict of interest” in a business setting?
A) A CEO making a decision that benefits the company while ignoring personal financial gains
B) A company hiring a third-party consultant with no personal ties to the company
C) A manager awarding a contract to a company owned by a close relative
D) A business following industry standards to ensure fair competition
What does the term “ethical leadership” refer to in the context of business ethics?
A) Leaders who prioritize profit over ethics
B) Leaders who make ethical decisions and set an example for others to follow
C) Leaders who avoid making decisions to avoid potential ethical dilemmas
D) Leaders who focus solely on legal compliance without considering the ethical impact
What is the role of ethics committees in businesses?
A) To promote unethical behavior and secrecy within the company
B) To review and recommend solutions to ethical dilemmas faced by the organization
C) To ensure all employees are paid equally, regardless of their work performance
D) To handle financial records and ensure profits are maximized at any cost
Which of the following best describes “moral relativism” in business ethics?
A) The belief that ethical standards should be universally applied regardless of context
B) The idea that ethical decisions should be based on the greatest benefit for the most people
C) The belief that ethical standards vary based on cultural, social, or personal perspectives
D) The theory that businesses should always follow the law, even if it conflicts with ethical considerations
What does the ethical principle of “accountability” require from businesses?
A) To only be responsible for financial decisions and ignore social impacts
B) To take responsibility for their actions, decisions, and their consequences
C) To follow only the law without considering ethical implications
D) To avoid responsibility for decisions and shift blame to others
Which of the following is an example of a company practicing “business integrity”?
A) Reporting financial earnings honestly, even when it may result in a negative financial outlook
B) Cutting corners to reduce costs, even if it means compromising quality or safety
C) Engaging in deceptive advertising to attract more customers
D) Discriminating against certain groups of employees to enhance productivity
Which principle in business ethics emphasizes the importance of honesty in communication and decision-making?
A) Fairness
B) Transparency
C) Justice
D) Beneficence
Which of the following represents an ethical dilemma in business?
A) A business faces a choice between making a profit and protecting the environment
B) A company follows the law without considering its ethical consequences
C) A business communicates its product’s benefits clearly and honestly
D) A company works to improve its relationships with local communities
What is the importance of an “ethics audit” in a business?
A) To evaluate the financial performance of the company only
B) To ensure compliance with environmental laws
C) To assess how well the organization is following ethical standards and practices
D) To determine the most profitable strategies for the company
What is a key characteristic of ethical decision-making in business?
A) Focusing solely on profitability and ignoring ethical concerns
B) Making decisions that consider the welfare of all stakeholders, not just shareholders
C) Only considering legal consequences and avoiding any moral considerations
D) Making decisions based on what will result in the least amount of work
What is the primary purpose of contract law in business?
A) To determine criminal liability for fraudulent acts
B) To establish guidelines for legal compliance in international trade
C) To ensure agreements between parties are enforceable and legally binding
D) To dictate the structure of corporate governance
Which of the following is a requirement for a valid contract?
A) A written document signed by a witness
B) An offer, acceptance, and consideration
C) Registration with a government agency
D) A public announcement of the agreement
What is the doctrine of “stare decisis”?
A) The legal principle of following precedents set by higher courts
B) The requirement for all contracts to be written and notarized
C) The enforcement of international laws in domestic courts
D) The process of judicial review in constitutional cases
Which of the following best describes intellectual property (IP) law?
A) A law that governs the protection of individuals’ rights to their creative works
B) A regulation that manages the disposal of company assets
C) A law that determines liability in product safety cases
D) A requirement for businesses to disclose financial information
What does the term “tort” refer to in the legal framework for business?
A) A violation of criminal law
B) A civil wrong that causes harm or loss to another party
C) A formal agreement between two or more parties
D) A legal provision for tax evasion cases
Which of the following is an example of a tort claim?
A) A customer sues a company for negligence after being injured by a defective product
B) A business files for bankruptcy due to poor management
C) A corporation is penalized for failing to pay taxes
D) A dispute arises between two companies over a merger agreement
What is the purpose of antitrust laws in business?
A) To regulate international trade agreements
B) To protect consumers by preventing monopolistic practices and promoting fair competition
C) To ensure businesses comply with environmental regulations
D) To provide tax incentives for startups
Which of the following is an example of an antitrust violation?
A) A company implements fair pricing policies for its customers
B) Two large companies agree to fix prices to eliminate competition
C) A small business files a lawsuit against another for breach of contract
D) A corporation donates funds to a charity to improve its public image
Which of the following best describes the role of employment law in business?
A) To govern corporate mergers and acquisitions
B) To regulate workplace practices and protect employee rights
C) To ensure compliance with international trade agreements
D) To resolve disputes between businesses and their investors
What is the primary purpose of the Equal Employment Opportunity Commission (EEOC)?
A) To enforce labor laws that protect against workplace discrimination
B) To ensure businesses follow environmental safety standards
C) To manage corporate tax compliance programs
D) To regulate intellectual property disputes between companies
Which of the following is true regarding the principle of “limited liability”?
A) Business owners are personally responsible for all company debts and liabilities
B) Shareholders are only liable for the amount they have invested in the business
C) All business debts must be covered by the personal assets of directors
D) Employees are held responsible for corporate losses
What is the main difference between criminal law and civil law in a business context?
A) Criminal law deals with disputes between businesses, while civil law addresses regulatory compliance
B) Civil law involves penalties like imprisonment, while criminal law results in monetary compensation
C) Criminal law focuses on offenses against the state, while civil law deals with disputes between individuals or organizations
D) Civil law is mandatory, while criminal law is optional for businesses
Which of the following is an example of a breach of fiduciary duty?
A) An employee violating workplace safety regulations
B) A director prioritizing personal interests over the interests of shareholders
C) A company failing to pay taxes on time
D) A supplier not delivering goods as agreed in a contract
Under the Uniform Commercial Code (UCC), which of the following governs the sale of goods?
A) Real estate law
B) Article 2
C) Patent law
D) Bankruptcy law
Which law governs deceptive advertising practices in the United States?
A) Sherman Antitrust Act
B) Federal Trade Commission Act
C) Civil Rights Act
D) Sarbanes-Oxley Act
What does the term “arbitration” refer to in resolving business disputes?
A) A formal court process to settle legal claims
B) An alternative dispute resolution process where a neutral third party renders a binding decision
C) A voluntary meeting between disputing parties to resolve their issues informally
D) A mandatory government investigation into corporate practices
What is the purpose of the Sarbanes-Oxley Act?
A) To enforce antitrust laws and prevent monopolies
B) To increase corporate transparency and prevent fraudulent financial practices
C) To regulate the sale of goods in interstate commerce
D) To establish guidelines for international business transactions
Which of the following best describes a “statutory law”?
A) Laws created by judges through court decisions
B) Laws established by legislative bodies like Congress
C) Informal rules agreed upon by businesses
D) International treaties governing global trade
What is the primary focus of environmental law in business?
A) To manage intellectual property disputes between companies
B) To regulate the use of natural resources and reduce environmental harm
C) To ensure fair treatment of employees
D) To govern mergers and acquisitions in the energy sector
Which of the following is a key requirement for businesses under the General Data Protection Regulation (GDPR)?
A) Providing consumers with free products
B) Ensuring the protection and privacy of personal data for individuals in the European Union
C) Submitting annual tax reports to the European Commission
D) Offering unlimited data storage to all customers
Which of the following is a primary responsibility of a board of directors in corporate governance?
A) Managing the daily operations of the company
B) Setting the strategic direction and overseeing management
C) Auditing the company’s financial records
D) Regulating employee salaries and bonuses
What is the primary purpose of corporate governance?
A) To maximize shareholder wealth by any means
B) To establish a framework of rules and practices to ensure accountability and transparency
C) To regulate the number of shares issued in the stock market
D) To enforce mandatory mergers for struggling businesses
Which legal principle ensures that corporate officers act in the best interests of the corporation and its shareholders?
A) Duty of Loyalty
B) Limited Liability
C) Stare Decisis
D) Res Judicata
What is a fiduciary duty?
A) The legal obligation to pay taxes on corporate income
B) The responsibility of company executives to act in the best interests of stakeholders
C) The requirement to comply with environmental regulations
D) The duty to disclose insider trading activities
Which of the following is a key principle of the Sarbanes-Oxley Act (SOX)?
A) Simplification of financial reporting for small businesses
B) Enhanced financial disclosures and increased accountability for corporate executives
C) Elimination of regulations for publicly traded companies
D) Standardization of global corporate governance practices
What is the role of independent directors on a corporate board?
A) To represent the interests of employees exclusively
B) To monitor management and provide unbiased oversight
C) To act as legal counsel for the company
D) To handle day-to-day management tasks
What is the purpose of a corporate code of ethics?
A) To provide detailed legal requirements for all company activities
B) To guide employees and management in ethical decision-making
C) To establish penalties for regulatory violations
D) To ensure compliance with tax laws
Which of the following best defines the term “shareholder activism”?
A) Shareholders suing the company for breach of contract
B) Efforts by shareholders to influence a company’s behavior by exercising their voting rights
C) A collective boycott of the company’s products by investors
D) Shareholders creating independent companies to compete with the corporation
What is the legal obligation of a company to disclose material information to shareholders?
A) Equal Opportunity Disclosure
B) Duty of Candor
C) Insider Trading Prevention
D) Ethical Compliance Reporting
What is the “business judgment rule”?
A) A legal principle that protects directors and officers from liability for decisions made in good faith and in the best interests of the company
B) A guideline for managers to make investment decisions based on personal preferences
C) A regulation requiring businesses to report all decisions to shareholders
D) A rule enforcing the use of arbitration for business disputes
Which of the following best describes insider trading?
A) Legal trading of a company’s stock by employees through public markets
B) Buying or selling stock based on material, non-public information
C) Conducting trades on behalf of clients with written authorization
D) Issuing stocks to employees as part of a compensation package
Which law was designed to combat corporate fraud and improve investor confidence in financial disclosures?
A) Dodd-Frank Act
B) Sarbanes-Oxley Act (SOX)
C) Federal Trade Commission Act
D) Securities Exchange Act
What is the purpose of whistleblower protection laws in corporate governance?
A) To prevent employees from disclosing sensitive corporate secrets
B) To protect individuals who report illegal or unethical corporate activities from retaliation
C) To reward employees for exceptional performance in compliance
D) To ensure all corporate decisions are documented
Which of the following is NOT a typical component of corporate social responsibility (CSR)?
A) Ethical business practices
B) Environmental sustainability initiatives
C) Maximizing short-term shareholder profits at all costs
D) Community engagement programs
What is the role of the Securities and Exchange Commission (SEC) in corporate governance?
A) To create corporate laws and enforce compliance
B) To regulate securities markets and protect investors from fraud
C) To oversee employee contracts and salary agreements
D) To conduct audits of all publicly traded companies
Which of the following is an example of a conflict of interest in corporate governance?
A) A director approving a contract that benefits a company in which they hold significant shares
B) A shareholder voting against a merger proposal
C) An employee reporting unethical practices to the HR department
D) A board member stepping down due to personal reasons
What is the significance of the “duty of care” in corporate governance?
A) It requires directors and officers to make informed and prudent decisions on behalf of the corporation
B) It mandates companies to provide health insurance to all employees
C) It ensures compliance with all international trade laws
D) It obligates businesses to prioritize community welfare over profitability
What is the legal term for the division of ownership and control in corporations?
A) Corporate Partitioning
B) Separation of Powers
C) Agency Theory
D) Limited Liability Doctrine
What is the primary role of the audit committee in corporate governance?
A) To oversee the corporation’s financial reporting and disclosure
B) To manage shareholder relations and proxy voting
C) To develop marketing strategies for the business
D) To negotiate employee contracts and salaries
What is “proxy voting” in the context of corporate governance?
A) Allowing shareholders to vote on corporate matters via a designated representative
B) Employees voting on internal corporate policies
C) Board members selecting a new CEO without shareholder input
D) Customers influencing the company’s business strategies
Which of the following is a key responsibility of an ethics committee in a corporation?
A) Drafting all corporate policies related to operations
B) Monitoring compliance with ethical standards and handling ethical violations
C) Determining employee salaries and benefits
D) Supervising the marketing department’s strategies
What is the primary goal of corporate governance frameworks?
A) To ensure the company operates with maximum profitability regardless of ethics
B) To create a balanced relationship among stakeholders, management, and the board of directors
C) To centralize decision-making solely with the CEO
D) To reduce shareholder involvement in corporate decision-making
Which of the following is a typical role of shareholders in corporate governance?
A) Managing the company’s day-to-day operations
B) Electing members of the board of directors
C) Approving employee contracts
D) Auditing financial statements
Which corporate governance mechanism is aimed at aligning the interests of managers and shareholders?
A) Stock options for executives
B) Regulatory compliance training
C) Whistleblower protection programs
D) Corporate social responsibility initiatives
The principle of “transparency” in corporate governance refers to:
A) Ensuring that all corporate decisions are kept confidential
B) Disclosing accurate and timely information to stakeholders
C) Allowing only shareholders to access financial data
D) Eliminating the use of written records in decision-making processes
What does the term “stakeholder governance” emphasize?
A) Prioritizing only shareholders’ interests
B) Considering the interests of all parties affected by the corporation’s actions, including employees, customers, and the community
C) Reducing the influence of external regulators
D) Strengthening the CEO’s decision-making power
Which of the following best describes “dual-class shares”?
A) Shares that give equal voting rights to all shareholders
B) A stock structure where one class of shares provides greater voting power than others
C) A system where preferred shares have lower dividend rates than common shares
D) A share class designed for non-profit corporations
What is the “clawback” provision in executive compensation policies?
A) A requirement for executives to return bonuses or incentives if financial misstatements occur
B) A policy allowing executives to increase their stock options retroactively
C) A regulation that limits executive salaries to a fixed percentage of company profits
D) A mandatory retirement clause for board members
Which of the following practices is prohibited by the Foreign Corrupt Practices Act (FCPA)?
A) Offering bribes to foreign government officials to gain business advantages
B) Engaging in legitimate lobbying activities in foreign countries
C) Expanding operations through mergers and acquisitions abroad
D) Conducting marketing campaigns targeted at international customers
Which governance mechanism ensures oversight of the company’s financial reporting process?
A) Risk management committee
B) Audit committee
C) Compensation committee
D) Marketing committee
What is the legal doctrine of “piercing the corporate veil”?
A) Holding shareholders personally liable for corporate debts under certain circumstances
B) Preventing corporations from entering into contracts with competitors
C) Limiting the liability of directors and officers
D) Prohibiting insider trading in closely-held corporations
The term “proxy contest” refers to:
A) A legal dispute between shareholders and the board of directors
B) A competition for shareholder votes to change the board of directors
C) An internal conflict over executive compensation
D) A court case involving intellectual property rights
Which of the following laws establishes the rights of employees to form unions and engage in collective bargaining?
A) Sarbanes-Oxley Act
B) National Labor Relations Act (NLRA)
C) Dodd-Frank Act
D) Federal Trade Commission Act
Which type of director is typically considered more independent in a corporate board?
A) Executive director
B) Non-executive director
C) Shareholder representative
D) Internal auditor
What is the “comply or explain” approach in corporate governance?
A) A regulation requiring companies to comply with all legal requirements without exception
B) A policy where companies follow corporate governance codes or explain deviations
C) A mandate to enforce corporate codes of ethics in all subsidiaries
D) A guideline ensuring all whistleblowers are compensated
The purpose of ESG (Environmental, Social, and Governance) reporting in corporate governance is to:
A) Maximize short-term profits for the company
B) Focus solely on legal compliance without considering sustainability
C) Measure and disclose a company’s impact on environmental and social factors, as well as governance practices
D) Eliminate the need for traditional financial reports
What is the primary function of a company’s compensation committee?
A) To determine dividend payouts to shareholders
B) To establish and review executive pay and benefits packages
C) To manage employee training programs
D) To approve all departmental budgets
Which of the following is a responsibility of the nominating committee in corporate governance?
A) Selecting and recommending candidates for the board of directors
B) Approving the company’s marketing strategy
C) Monitoring compliance with environmental regulations
D) Developing the corporate budget
Which of the following is an example of an unethical corporate governance practice?
A) Ensuring independent audits of financial records
B) Executives engaging in nepotism for board appointments
C) Implementing a whistleblower hotline for reporting misconduct
D) Establishing a risk management framework
Which of the following is an example of a tort in business law?
A) Breach of a non-compete clause in a contract
B) Failing to perform obligations under a contract
C) Defamation of a competitor’s product or reputation
D) Issuing shares without shareholder approval
What is the primary legal standard used to determine negligence in tort law?
A) Reasonable person standard
B) Strict liability standard
C) Beyond a reasonable doubt
D) Doctrine of preemption
Which of the following is NOT protected under intellectual property law?
A) Trademarks
B) Trade secrets
C) Employment contracts
D) Patents
Strict liability in product liability cases means that a business is liable if:
A) It intentionally caused harm to a consumer
B) The consumer misused the product
C) A defective product caused injury, regardless of negligence or intent
D) The business failed to warn about all possible risks, even unreasonable ones
Which of the following is an example of a valid contract?
A) A verbal agreement with no intention to be legally bound
B) An agreement made under duress
C) A written agreement that satisfies all elements of a contract
D) A promise to give a gift without consideration
The ethical theory that focuses on the greatest good for the greatest number of people is known as:
A) Deontology
B) Utilitarianism
C) Virtue ethics
D) Stakeholder theory
In contract law, the term “consideration” refers to:
A) The mutual exchange of promises or value
B) The requirement for a contract to be in writing
C) The intention to create legal relations
D) The review of terms by a court before enforcement
Which ethical principle is being violated if a business intentionally misrepresents its financial health to stakeholders?
A) Fairness
B) Respect
C) Honesty
D) Beneficence
In tort law, the “duty of care” owed by a business is determined by:
A) The relationship between the business and the affected party
B) The intentions of the business when harm occurred
C) Statutory limitations on liability
D) The profitability of the business activity
What is the purpose of a trademark in business?
A) To protect an invention or process
B) To identify the source of goods or services and prevent consumer confusion
C) To enforce restrictive covenants in employment contracts
D) To formalize a corporate governance framework
Which of the following contracts must be in writing to be enforceable under the Statute of Frauds?
A) A contract for the sale of goods valued at $400
B) A contract for services to be performed within one year
C) A contract for the sale of real estate
D) A contract between two businesses for consulting services
The ethical concept of “stakeholder theory” emphasizes:
A) Maximizing shareholder wealth above all else
B) Considering the impacts of business decisions on all parties affected, including employees, customers, and communities
C) Reducing external oversight of corporate governance
D) Following legal obligations without considering ethical implications
What legal doctrine allows courts to imply a contract even when no formal agreement exists, to prevent unjust enrichment?
A) Doctrine of promissory estoppel
B) Implied warranty
C) Quasi-contract
D) Caveat emptor
Which of the following would likely NOT result in strict liability for a business?
A) Manufacturing a defective product that harms a consumer
B) Allowing hazardous materials to leak into a public water supply
C) Breaching a confidentiality clause in a service agreement
D) Owning a wild animal that injures someone
An essential element of contract law is “mutual assent.” This means:
A) Both parties must have equal bargaining power
B) Both parties agree to the terms of the contract with a “meeting of the minds”
C) Both parties must have written evidence of the agreement
D) Both parties must be represented by legal counsel
The ethical obligation to minimize harm while maximizing benefits in business decisions aligns with which ethical framework?
A) Virtue ethics
B) Utilitarianism
C) Deontology
D) Relativism
Which intellectual property protection is most appropriate for a business to secure a unique logo?
A) Copyright
B) Trademark
C) Patent
D) Trade secret
Which of the following is true about the enforcement of non-compete clauses in contracts?
A) They are never enforceable in U.S. courts
B) They are enforceable if reasonable in time, geography, and scope
C) They are enforceable regardless of their impact on the employee
D) They are only enforceable if the employee is terminated for cause
In tort law, the term “proximate cause” refers to:
A) The immediate cause of harm that establishes liability
B) The location where harm occurred
C) The statutory duty violated by the defendant
D) The economic losses suffered by the plaintiff
Which ethical principle best describes the idea that businesses should prioritize transparency and honesty in all stakeholder communications?
A) Justice
B) Autonomy
C) Integrity
D) Fidelity
Which of the following is a primary responsibility of a corporation’s board of directors?
A) Day-to-day management of business operations
B) Oversight of the CEO and major corporate policies
C) Drafting employment contracts for all employees
D) Ensuring compliance with international trade agreements
The Sarbanes-Oxley Act of 2002 was enacted primarily to:
A) Enhance environmental protections for corporations
B) Improve corporate governance and prevent financial fraud
C) Strengthen labor rights and workplace safety standards
D) Regulate mergers and acquisitions in the tech industry
What is the primary role of an audit committee within a corporation?
A) Approve compensation packages for executives
B) Oversee financial reporting and the external audit process
C) Manage internal conflict resolution between employees
D) Develop marketing strategies for new products
In the context of corporate governance, fiduciary duty refers to:
A) A legal obligation to act in the best interest of shareholders
B) The ethical obligation to balance stakeholder interests
C) The requirement to disclose all corporate transactions
D) A contractual duty to maintain confidentiality
Which of the following is a legal obligation under corporate governance standards?
A) Ensuring shareholder profit maximization
B) Maintaining accurate and transparent financial records
C) Reducing competition in the market
D) Appointing family members to key leadership roles
Corporate governance codes are primarily designed to:
A) Eliminate the need for government regulations
B) Increase accountability and transparency within organizations
C) Standardize compensation for board members
D) Restrict companies from expanding internationally
Under the doctrine of respondeat superior, a corporation can be held liable for:
A) Employee actions performed within the scope of their employment
B) Financial losses incurred by independent contractors
C) Competitor negligence that affects market conditions
D) Breaches of personal contracts signed by employees
Which ethical principle is most applicable when a business prioritizes environmental sustainability to benefit future generations?
A) Justice
B) Utilitarianism
C) Stewardship
D) Reciprocity
What is the role of a corporate compliance program?
A) To streamline supply chain logistics
B) To identify and mitigate legal and ethical risks within the organization
C) To establish executive compensation packages
D) To implement marketing and advertising strategies
A derivative lawsuit in corporate governance is brought by:
A) The board of directors against the CEO
B) A shareholder on behalf of the corporation against management or directors
C) The corporation against a competitor for breach of antitrust laws
D) The government for violations of labor laws
What is the business judgment rule?
A) A standard that protects directors from liability for decisions made in good faith and in the best interest of the company
B) A doctrine requiring businesses to disclose all internal communications to stakeholders
C) A regulation that mandates equal profit-sharing among shareholders
D) A principle prohibiting board members from serving on multiple boards simultaneously
Which of the following is a key ethical challenge in corporate governance?
A) Encouraging whistleblowing without fear of retaliation
B) Avoiding stakeholder engagement in decision-making processes
C) Maintaining profitability at all costs
D) Promoting exclusivity among board members
Which of the following best defines insider trading?
A) Trading goods and services within the corporation
B) The buying or selling of securities based on non-public, material information
C) Collaborating with competitors to fix prices
D) Disclosing financial information to government regulators
The concept of corporate social responsibility (CSR) emphasizes:
A) Compliance with legal requirements only
B) The obligation of businesses to contribute positively to society beyond profit-making
C) Increasing shareholder wealth at the expense of stakeholders
D) Expanding operations into underserved markets
In intellectual property law, trade secrets are protected as long as they:
A) Are filed with the U.S. Patent and Trademark Office
B) Remain confidential and provide a competitive advantage
C) Are published in scientific journals
D) Are used exclusively within a single industry
Which ethical approach would emphasize fairness and equality in corporate governance decision-making?
A) Deontology
B) Utilitarianism
C) Virtue ethics
D) Justice-based ethics
A primary responsibility of corporate executives under the Sarbanes-Oxley Act includes:
A) Certifying the accuracy of financial statements
B) Increasing dividend payouts to shareholders
C) Ensuring that mergers and acquisitions are completed within one fiscal year
D) Expanding the number of seats on the board of directors
Which of the following is NOT typically included in a code of ethics for corporations?
A) Standards for employee conduct
B) Guidelines for conflict of interest management
C) Detailed marketing strategies
D) Expectations for corporate transparency
When a corporate board fails to act in the best interest of shareholders, it may be accused of:
A) Ethical relativism
B) Breach of fiduciary duty
C) Negligent hiring practices
D) Financial misrepresentation
Under stakeholder theory, a company’s responsibilities extend to:
A) Shareholders only
B) All parties impacted by the business, including employees, customers, suppliers, and communities
C) Competitors in the market
D) Government agencies exclusively
What is the purpose of a whistleblower policy in corporate governance?
A) To restrict employees from reporting unethical behavior
B) To protect employees who report misconduct from retaliation
C) To ensure compliance with international trade laws
D) To limit the liability of senior management in case of fraud
Which of the following is an example of ethical leadership in business?
A) Ignoring conflicts of interest to expedite decision-making
B) Promoting transparency and accountability in operations
C) Minimizing employee involvement in decision-making processes
D) Prioritizing short-term profits over stakeholder interests
The concept of “duty of care” in corporate governance refers to:
A) A manager’s obligation to maximize shareholder profits
B) A director’s responsibility to make informed and prudent decisions
C) A company’s requirement to provide employee health benefits
D) A CEO’s duty to negotiate vendor contracts
Which regulatory body is primarily responsible for enforcing securities laws in the United States?
A) Federal Trade Commission (FTC)
B) U.S. Securities and Exchange Commission (SEC)
C) Department of Justice (DOJ)
D) Financial Accounting Standards Board (FASB)
Which of the following best describes the “triple bottom line” approach in business ethics?
A) Maximizing financial returns, reducing costs, and increasing efficiency
B) Focusing on profits, people, and the planet
C) Ensuring compliance with regulations, tax optimization, and legal protection
D) Developing a robust supply chain, strong branding, and market share growth
A corporate board’s compensation committee is primarily responsible for:
A) Developing strategies to enter new markets
B) Setting executive compensation and performance incentives
C) Approving corporate acquisitions and mergers
D) Ensuring compliance with environmental regulations
Which law requires publicly traded companies to establish internal controls for financial reporting?
A) Clayton Antitrust Act
B) Sarbanes-Oxley Act (SOX)
C) Sherman Antitrust Act
D) Dodd-Frank Wall Street Reform Act
What is the primary ethical concern with conflicts of interest in corporate governance?
A) They reduce competition in the industry
B) They undermine impartial decision-making and stakeholder trust
C) They lead to increased operational costs for businesses
D) They create additional regulatory scrutiny
Which of the following best describes the “stakeholder approach” in business ethics?
A) Emphasizing short-term profits over long-term responsibilities
B) Focusing on the interests of all parties affected by the business
C) Avoiding responsibility for environmental and social issues
D) Prioritizing the interests of competitors to ensure fair practices
Which principle is violated if a director knowingly misleads shareholders about the company’s financial status?
A) Duty of loyalty
B) Duty of confidentiality
C) Duty of care
D) Duty of sustainability
Which of the following actions would be considered unethical under the Foreign Corrupt Practices Act (FCPA)?
A) Offering a bribe to a foreign official to secure a business contract
B) Reporting financial results inaccurately to shareholders
C) Acquiring a competitor without notifying regulators
D) Failing to disclose conflicts of interest in board decisions
What does the term “ethical relativism” imply in a global business context?
A) Ethical standards are universally agreed upon across cultures
B) Ethical practices vary based on local norms and traditions
C) Business decisions should prioritize shareholder profits exclusively
D) Ethical decisions are independent of cultural influences
Which of the following is a key component of the Business Roundtable’s definition of corporate purpose?
A) Maximizing shareholder returns above all else
B) Delivering value to customers, employees, and stakeholders
C) Reducing ethical oversight to minimize operational costs
D) Focusing solely on regulatory compliance
What is the primary function of the Federal Trade Commission (FTC)?
A) To regulate securities trading in the United States
B) To prevent anticompetitive, deceptive, and unfair business practices
C) To enforce intellectual property laws
D) To oversee corporate governance in public companies
Which of the following legal doctrines holds a company liable for employee actions performed during work hours?
A) Vicarious liability
B) Strict liability
C) Res ipsa loquitur
D) Sovereign immunity
Which of the following best describes intellectual property law?
A) Laws protecting the rights of investors in financial markets
B) Regulations safeguarding creative works, inventions, and trade secrets
C) Guidelines for mergers and acquisitions in competitive industries
D) Standards for environmental compliance in manufacturing
The principle of “duty of loyalty” in corporate governance requires directors to:
A) Maximize profits for employees
B) Act in the best interests of the corporation and its shareholders
C) Ensure strict compliance with environmental laws
D) Prioritize the interests of competitors over their own company
What is one key difference between legal and ethical obligations in business?
A) Legal obligations are optional, while ethical obligations are enforceable by law
B) Ethical obligations go beyond the law and focus on moral principles
C) Legal obligations apply only to executives, while ethical obligations apply to employees
D) Ethical obligations are regulated by government agencies, while legal obligations are not
What is the primary goal of corporate governance?
A) To enhance the personal wealth of board members
B) To ensure accountability, fairness, and transparency in decision-making
C) To focus exclusively on maximizing shareholder value
D) To comply with government regulations without considering ethical responsibilities
Which of the following is considered an ethical breach in stakeholder management?
A) Including employees in key decision-making processes
B) Prioritizing long-term value creation over short-term profits
C) Ignoring the concerns of local communities affected by operations
D) Complying with labor laws in global supply chains
What does the “business judgment rule” protect corporate directors from?
A) Personal liability for honest mistakes made in decision-making
B) Criminal prosecution for intentional misconduct
C) Civil liability for violating federal securities laws
D) Regulatory fines for corporate fraud
Under contract law, which element is NOT essential for forming a valid contract?
A) Offer and acceptance
B) Legal purpose
C) Mutual consideration
D) Performance of the contract within six months
Which ethical principle emphasizes “the greatest good for the greatest number”?
A) Deontological ethics
B) Utilitarianism
C) Virtue ethics
D) Stakeholder theory
What is the main purpose of the Sherman Antitrust Act?
A) To prevent unfair taxation of corporations
B) To prohibit monopolistic practices and promote fair competition
C) To protect intellectual property rights
D) To regulate the labor practices of multinational corporations
What is a fiduciary duty in the context of corporate governance?
A) A legal obligation to ensure compliance with environmental laws
B) A responsibility to act in the best interests of the organization and its stakeholders
C) An ethical requirement to increase employee salaries annually
D) A contractual obligation to disclose all financial transactions publicly
What is the significance of stakeholder theory in ethical business practices?
A) It shifts the focus from profits to the well-being of all parties affected by the business
B) It eliminates the need for compliance with government regulations
C) It prioritizes the interests of shareholders over other stakeholders
D) It reduces the company’s overall responsibility toward environmental issues
Which of the following is an example of intellectual property infringement?
A) Failing to disclose material information in financial reports
B) Using copyrighted material in advertisements without permission
C) Offering bribes to foreign officials to secure contracts
D) Engaging in insider trading on the stock market
In contract law, what does “consideration” refer to?
A) The mutual exchange of value between the parties to the contract
B) The ability of both parties to understand the contract terms
C) The intention to create legal relations between the parties
D) The fairness of the terms agreed upon in the contract
What is the primary purpose of the Dodd-Frank Wall Street Reform Act?
A) To reduce the corporate tax burden on multinational corporations
B) To enhance financial regulations and increase accountability in the banking sector
C) To regulate intellectual property rights across state lines
D) To establish uniform labor laws for international businesses
What is one ethical challenge associated with global supply chains?
A) Ensuring compliance with antitrust laws
B) Balancing the demands of cost reduction with fair labor practices
C) Providing accurate financial reporting across multiple jurisdictions
D) Avoiding conflicts of interest within the corporate board
The doctrine of “strict liability” is most relevant in which legal area?
A) Contract law
B) Intellectual property law
C) Product liability law
D) Antitrust law
What role does the Foreign Corrupt Practices Act (FCPA) play in international business ethics?
A) It regulates intellectual property disputes between multinational corporations
B) It prohibits U.S. companies from engaging in bribery to secure foreign contracts
C) It establishes labor laws for international supply chains
D) It ensures environmental compliance for U.S. exporters
Which of the following is NOT considered a legal remedy for breach of contract?
A) Specific performance
B) Punitive damages
C) Compensatory damages
D) Rescission
The concept of “due diligence” in corporate governance refers to:
A) A manager’s obligation to act in good faith in all business dealings
B) A thorough investigation of a company’s financial and operational risks
C) A company’s commitment to environmental sustainability
D) A legal requirement to disclose executive compensation
Which ethical framework prioritizes the intrinsic value of doing the “right thing”?
A) Consequentialism
B) Deontological ethics
C) Utilitarianism
D) Relativism
What does the term “ethical culture” in a corporation refer to?
A) The formal policies ensuring compliance with labor laws
B) The shared values and practices that guide employee behavior
C) The emphasis on maximizing short-term shareholder returns
D) The adoption of advanced technology to improve operations
What is a primary ethical concern with non-disclosure agreements (NDAs)?
A) They limit the enforceability of contracts in court
B) They may suppress whistleblowing or reporting of unethical behavior
C) They restrict a company’s ability to innovate
D) They undermine intellectual property protection
What does the term “corporate social responsibility” (CSR) refer to?
A) The requirement to maximize profits for shareholders
B) The voluntary actions taken by businesses to address social and environmental concerns
C) The legal obligation of businesses to disclose all financial information
D) The enforcement of government regulations on business practices
Which of the following best describes “whistleblowing”?
A) Reporting a company’s financial statements to regulatory authorities
B) The act of publicly disclosing unethical or illegal activities within a company
C) The practice of hiring external auditors to review financial records
D) A method for resolving contractual disputes through negotiation
Under what circumstances is a contract considered voidable?
A) When both parties agree to terminate it
B) When the contract is made under duress, coercion, or fraud
C) When one party breaches the contract without justification
D) When the contract is deemed illegal by the government
Which of the following is an example of a breach of fiduciary duty?
A) A board member prioritizing personal financial gain over the company’s best interests
B) A company implementing a new technology to reduce production costs
C) An employee reporting unethical behavior through internal channels
D) A firm complying with new government regulations on environmental impact
What does the “veil of incorporation” concept protect shareholders from?
A) Personal liability for corporate debts and actions
B) Lawsuits involving intellectual property infringement
C) Government intervention in daily business operations
D) Employee lawsuits for wrongful termination
Which of the following is a key element of business ethics?
A) Prioritizing profit maximization above all other factors
B) Ensuring fair treatment and respect for all stakeholders
C) Adhering strictly to economic theories without consideration of moral implications
D) Minimizing legal compliance to reduce operational costs
Which law is designed to prevent unfair trade practices and promote competition?
A) The Sarbanes-Oxley Act
B) The Federal Trade Commission Act
C) The Foreign Corrupt Practices Act
D) The Dodd-Frank Wall Street Reform Act
What is the role of a “non-compete clause” in an employment contract?
A) To limit an employee’s ability to work for competitors after leaving the company
B) To guarantee employees a certain salary
C) To ensure employees do not disclose confidential information
D) To prevent employees from pursuing legal action against the employer
Which of the following is true about intellectual property protection in business?
A) Intellectual property laws only apply to physical assets, not ideas or inventions
B) Patents, copyrights, and trademarks help protect a company’s creative assets from unauthorized use
C) Intellectual property protection is not necessary for startups or small businesses
D) Once intellectual property is shared, it is no longer protected under law
Which of the following actions would be considered an ethical violation in business?
A) Offering customers discounts during a seasonal sale
B) Misleading customers through false advertising
C) Adhering to safety regulations in the workplace
D) Disclosing financial performance during earnings reports
Which of the following is a legal defense against a claim of defamation?
A) The statement was true and could be verified by evidence
B) The statement was made in private and was not published to others
C) The statement was made with malicious intent
D) The statement was made in an advertisement
Which of the following is an example of an unethical conflict of interest?
A) A CEO using company resources for personal benefit
B) A company offering fair wages to employees
C) An employee disclosing confidential information to the public
D) A board member voting in favor of a decision that benefits their family member
What does the principle of “fair use” in copyright law allow?
A) Unlimited use of copyrighted works without permission for educational or non-commercial purposes
B) The right to use any copyrighted material without paying royalties
C) The right to claim authorship of someone else’s work
D) The exclusive rights of the original creator to control the use of their work
Which of the following is a primary function of antitrust laws in business?
A) To regulate advertising and marketing strategies
B) To ensure companies do not engage in anti-competitive practices
C) To protect workers from workplace discrimination
D) To create trade agreements between businesses and governments
What is the role of “due diligence” in mergers and acquisitions (M&A)?
A) To ensure that the parties involved in the transaction are equally profitable
B) To conduct a thorough evaluation of the target company’s financial health and legal status
C) To monitor post-merger integration efforts
D) To manage the public relations campaign for the newly formed entity
In business ethics, the “stakeholder theory” suggests that businesses should prioritize the interests of:
A) Only shareholders
B) Employees and suppliers
C) Customers, employees, communities, and other stakeholders
D) Government regulators
Which of the following is true about “strict liability” in product-related cases?
A) It requires proof of negligence to hold a company liable
B) It does not require proving fault or negligence, only that the product was defective
C) It applies only to products that are sold internationally
D) It applies only to cases involving physical injuries
Which of the following statements is true regarding ethical decision-making in business?
A) Ethical decision-making in business always leads to higher profits
B) Ethical decision-making should consider the impact on all stakeholders, not just shareholders
C) Business ethics are irrelevant when the company is not facing legal issues
D) Ethical decisions are only relevant to marketing and advertising practices
What is the purpose of the Sarbanes-Oxley Act?
A) To regulate environmental impact of business operations
B) To enhance financial transparency and reduce corporate fraud
C) To regulate international trade practices
D) To increase taxes on multinational corporations
Which of the following is an example of an ethical business practice?
A) Falsifying financial statements to improve market performance
B) Offering bribes to government officials to secure contracts
C) Implementing a code of ethics for employees to follow
D) Ignoring environmental regulations to reduce operational costs
Which of the following describes the “business judgment rule” in corporate governance?
A) It allows executives to make decisions based solely on legal requirements
B) It protects directors and officers from liability for decisions made in good faith, with reasonable judgment, and in the best interest of the company
C) It mandates that companies must disclose all internal decision-making processes to shareholders
D) It allows directors to ignore fiduciary duties when acting for personal gain
Under contract law, what is the term used to describe an agreement made without consideration?
A) Voidable contract
B) Valid contract
C) Void contract
D) Unenforceable contract
What is “ethical relativism” in business ethics?
A) The belief that ethical standards are universal and should apply to all businesses globally
B) The belief that ethical standards are subjective and depend on cultural or individual perspectives
C) The belief that businesses should only be concerned with profit maximization
D) The belief that laws and regulations are the only ethical standards to follow
Which of the following is a key principle of corporate governance?
A) Maximizing shareholder wealth at all costs
B) Ensuring transparency and accountability in corporate decisions
C) Focusing solely on short-term profit maximization
D) Preventing shareholders from participating in board decisions
What is a “consequentialist” approach to business ethics?
A) Ethics are determined by the consequences of actions, with the best outcomes for the greatest number of people being the goal
B) Ethics are determined by adherence to specific moral rules regardless of outcomes
C) Ethics are determined by the individual’s personal beliefs
D) Ethics are determined by the government’s laws and regulations
Which of the following is true regarding a breach of contract in business?
A) The injured party is entitled to compensation for actual damages suffered
B) Breaches are automatically void and unenforceable
C) The injured party has no right to terminate the contract
D) Breaches always result in criminal charges
What is “insider trading”?
A) A form of employee fraud where workers steal from a company’s assets
B) The illegal practice of trading company stock based on confidential, non-public information
C) The legal use of financial information to improve a company’s market position
D) The practice of a company trading its own stock to boost its value
Which of the following is a legal requirement under the Foreign Corrupt Practices Act (FCPA)?
A) U.S. businesses must disclose all financial transactions related to foreign governments
B) U.S. businesses must ensure that no bribes or illegal payments are made to foreign officials
C) U.S. businesses must avoid any interaction with foreign government officials
D) U.S. businesses are exempt from international anti-corruption laws
What is the primary purpose of intellectual property law in business?
A) To prevent businesses from using any patented technology
B) To protect the original creations of businesses, such as inventions, designs, and branding, from unauthorized use
C) To regulate how businesses interact with their competitors in the market
D) To allow businesses to legally copy the products of competitors for market advantage
Which of the following would be considered a violation of antitrust laws?
A) Companies collaborating to improve product quality and reduce environmental impact
B) Businesses forming an agreement to fix prices and limit competition in a market
C) Companies offering lower prices to attract new customers in a competitive market
D) Firms forming joint ventures to enter new markets legally
Which of the following is considered a form of strict liability in business law?
A) Breaching a contract without reasonable cause
B) Selling a defective product that causes harm to a consumer
C) Misleading advertising that leads to consumer confusion
D) Violating environmental regulations during manufacturing
In the context of business law, what is the “parol evidence rule”?
A) The rule that requires all verbal agreements to be written down for enforceability
B) The rule that limits the use of oral statements or prior written agreements to change the terms of a written contract
C) The rule that allows oral agreements to supersede written contracts
D) The rule that mandates all contracts to be signed by a notary public
Which of the following is true regarding the legal concept of “capacity” in contract law?
A) A contract is voidable if one of the parties lacks the legal ability to understand the terms due to age or mental impairment
B) All contracts are enforceable regardless of the parties’ mental capacity
C) Contracts made by minors are always considered void
D) Business contracts do not require any mental capacity to be enforceable
What is the purpose of the “equal opportunity” laws in business?
A) To ensure businesses prioritize the highest salaries for employees
B) To prevent discrimination based on race, gender, disability, or other protected characteristics in hiring and promotion practices
C) To ensure all business owners are equally involved in daily operations
D) To regulate the working hours and wages of employees
What does the term “due diligence” refer to in the context of mergers and acquisitions?
A) The ethical practice of employees disclosing any conflicts of interest
B) The process of conducting thorough research and investigation into a company’s financial and legal affairs before a merger or acquisition
C) The legal requirement to notify the government of a merger or acquisition
D) The process of informing employees about the merger or acquisition plans
In the context of business ethics, what is “transparency”?
A) Keeping company information private to avoid potential legal liabilities
B) Ensuring all business actions, decisions, and financial reports are made accessible and understandable to stakeholders
C) The process of hiding business mistakes from the public
D) Implementing a non-disclosure agreement for all employees and stakeholders
Which of the following is a primary responsibility of a company’s board of directors?
A) Overseeing daily operations and managing employees
B) Making decisions on pricing and advertising strategies
C) Ensuring the company’s adherence to legal and ethical standards, and making strategic decisions
D) Approving employee salaries and benefits
Which of the following is an example of “tort law” in business?
A) A business’s breach of a legally binding contract
B) A customer suing a business for injuries caused by a defective product
C) A company failing to pay taxes on time
D) A business refusing to follow environmental regulations
What is the purpose of “corporate social responsibility” (CSR) initiatives in business?
A) To improve profitability by cutting costs and reducing wages
B) To comply with government regulations related to the environment
C) To integrate ethical considerations and contribute to societal well-being while maintaining business success
D) To reduce competition in the market by forming monopolies
Which of the following describes the purpose of “ethics training” in a corporate setting?
A) To ensure that employees are only concerned with their legal duties
B) To educate employees on ethical decision-making, company policies, and how to navigate ethical dilemmas in business
C) To train employees on how to maximize profit at any cost
D) To make sure employees do not break any laws
In contract law, which of the following is considered an element of a legally binding contract?
A) Mutual consent
B) No need for a written document
C) Only oral agreements
D) A contract must be signed by a notary
Which of the following would be considered a breach of fiduciary duty by a corporate officer?
A) Acting in the best interests of the company and its shareholders
B) Making a decision that benefits the officer personally at the expense of the company’s shareholders
C) Voting for an executive compensation package that is within the industry standard
D) Disclosing all business-related transactions to shareholders
Which of the following is an example of “strict liability” in a business context?
A) A company suing an employee for breach of contract
B) A company held liable for injuries caused by a defect in its product, regardless of fault
C) A company being fined for environmental violations due to negligence
D) A company refusing to pay a supplier for services rendered
Which of the following is a key aspect of the Sarbanes-Oxley Act of 2002?
A) It restricts businesses from paying executive bonuses
B) It mandates that companies must disclose all financial information to the government
C) It requires companies to establish internal controls and reporting procedures to prevent fraud
D) It allows businesses to avoid paying taxes on profits
In the context of intellectual property law, what is “patent infringement”?
A) Using someone else’s copyrighted material without permission
B) The illegal copying or unauthorized use of a patented invention
C) Creating a new invention that violates an existing patent
D) Defining a product in terms of its intellectual property rights
Which of the following is true regarding the legal concept of “negligence”?
A) A business can be found negligent if it fails to exercise reasonable care in preventing harm to others
B) A business is always liable for harm caused by its employees, regardless of fault
C) Negligence is only applicable to criminal cases, not civil disputes
D) Negligence only applies if a contract has been breached
Under the law of torts, which of the following is an example of a “negligent tort”?
A) A business intentionally misrepresenting facts to gain a market advantage
B) A company accidentally causing harm to a customer by failing to maintain safe premises
C) A company violating antitrust laws to eliminate competitors
D) A company breaching a contract with a supplier
Which of the following is a core principle of corporate social responsibility (CSR)?
A) Focusing solely on profit maximization
B) Ignoring the impact of business decisions on the environment and society
C) Integrating ethical practices into business strategies to benefit both the company and the community
D) Maintaining business secrecy to avoid public scrutiny
What is “whistleblowing” in a business context?
A) An employee reporting unethical or illegal activities within the organization to external authorities
B) A business implementing a new marketing strategy
C) A CEO issuing a public statement about business operations
D) A company disclosing its earnings reports to shareholders
Which of the following is a potential consequence for a company found guilty of violating intellectual property laws?
A) The company may be forced to cease the use of the intellectual property in question and pay damages
B) The company will automatically receive a tax reduction
C) The company will be granted immunity from all future legal claims
D) The company will be allowed to continue using the intellectual property with no further consequences
What is the role of the Federal Trade Commission (FTC) in business law?
A) To enforce antitrust laws and prevent anti-competitive practices
B) To set corporate tax rates
C) To enforce laws related to business mergers and acquisitions
D) To regulate business wages and labor relations
Which of the following best defines “conflict of interest” in a business setting?
A) An employee facing personal financial problems
B) A situation where an individual’s personal interests interfere with their professional duties or responsibilities
C) A company operating in multiple industries
D) An employee performing tasks outside their normal duties
Which of the following is an example of a legal defense for a business facing a tort lawsuit?
A) The business intentionally caused harm to the plaintiff
B) The business had no duty of care to the plaintiff
C) The business was acting with reckless disregard for the law
D) The business attempted to harm the plaintiff for personal gain
Which of the following would be considered an unfair trade practice under antitrust law?
A) A company establishing a loyalty program for its customers
B) A company fixing prices with competitors to reduce competition
C) A company offering discounts during a seasonal sale
D) A company launching a new product with unique features
Which of the following is a requirement under the U.S. Copyright Act for a work to be protected by copyright law?
A) The work must be registered with the Copyright Office
B) The work must be of a creative nature and fixed in a tangible medium of expression
C) The work must be publicly disclosed to receive protection
D) The work must be created by an individual who is a citizen of the United States
What is the purpose of “disclosure” laws in business?
A) To keep company operations confidential and private
B) To ensure that businesses provide relevant financial and operational information to shareholders and the public
C) To prevent companies from releasing any information to the public
D) To limit corporate involvement in public affairs
In contract law, which of the following is considered an “offer”?
A) A proposal to form a legally binding agreement with specific terms and conditions
B) A conversation about a potential business partnership
C) An invitation to negotiate terms of an agreement
D) A request for a job application
Which of the following is the most important element in determining whether an act of “bribery” has occurred in business?
A) The amount of money exchanged
B) Whether the act was disclosed to the public
C) Whether a gift or payment was offered to influence a business decision
D) Whether the transaction was carried out in secrecy
What is the primary purpose of the “Consumer Product Safety Act”?
A) To regulate the prices of consumer products
B) To ensure that products are safe for consumers and do not pose an unreasonable risk of injury
C) To encourage businesses to increase product prices for higher profit margins
D) To promote marketing tactics to attract consumers
Which of the following best describes the concept of “due diligence” in business law?
A) The obligation of a business to ensure that all employees are well-trained
B) The process of conducting thorough research and analysis to evaluate the risks and benefits of a business decision
C) The act of complying with all applicable tax laws and regulations
D) The procedure of conducting an internal audit to verify company profits
Which of the following is true about “insider trading” in the context of business law?
A) It is legal for corporate executives to trade stocks based on non-public information if they disclose it to the public
B) It is legal for anyone to trade stocks based on rumors and gossip
C) It is illegal for individuals with access to non-public, material information about a company to trade on that information
D) It is legal to trade stocks based on public information alone
Under contract law, which of the following describes an “offer” that can be accepted by the other party?
A) A general invitation to discuss terms
B) A proposal to enter into a legally binding agreement with defined terms and conditions
C) A statement of intent to consider a future agreement
D) A promise to perform an action in the future
Which of the following is the primary responsibility of a corporate board of directors?
A) To manage day-to-day operations of the business
B) To make decisions that maximize shareholder value while ensuring ethical and legal compliance
C) To ensure the business has sufficient marketing and advertising plans
D) To directly supervise every employee of the company
Which of the following is a key characteristic of “strict product liability”?
A) The manufacturer must prove it was not at fault for causing harm
B) A consumer must prove that the product was defective and caused harm
C) The seller is automatically liable for harm caused by a defective product, regardless of fault
D) A consumer cannot sue the manufacturer for harm caused by a defective product
Which of the following is the primary purpose of “antitrust laws” in business?
A) To prevent companies from charging excessively high prices for their goods or services
B) To encourage businesses to form monopolies for increased profitability
C) To prevent anti-competitive practices and promote fair competition in the market
D) To regulate business mergers for the benefit of the economy
Which of the following is an example of a “non-disclosure agreement” (NDA) in business?
A) A contract that ensures a business can only hire employees from one region
B) A contract that prevents an employee from sharing proprietary or confidential business information with others
C) A contract that limits a business from participating in certain markets
D) A contract that specifies how a business handles employee complaints
Which of the following describes “trade secret” protection under intellectual property law?
A) It protects the name and branding of a business
B) It protects the confidential and proprietary business information that provides a competitive advantage
C) It allows businesses to patent ideas and inventions for public use
D) It protects a business’s public relations strategy
Which of the following is the primary focus of the “Foreign Corrupt Practices Act” (FCPA)?
A) To ensure that businesses disclose all financial transactions to the government
B) To prevent U.S. businesses from bribing foreign government officials to gain business advantages
C) To regulate the use of foreign exchange in international trade
D) To monitor and control the operations of foreign-based companies in the U.S.
What is the role of the U.S. Equal Employment Opportunity Commission (EEOC) in business law?
A) To enforce labor laws relating to minimum wage and working hours
B) To ensure that businesses comply with anti-discrimination laws in hiring, firing, and promotion practices
C) To regulate business mergers and acquisitions
D) To set environmental standards for business operations
Which of the following is an example of a “compensatory” damage in a civil lawsuit?
A) A monetary amount awarded to punish the defendant for their actions
B) A monetary award to compensate the plaintiff for actual losses incurred due to the defendant’s actions
C) A court order that prevents the defendant from engaging in certain business practices in the future
D) A payment to the government for violating industry regulations
Which of the following best defines “executive compensation” in the context of corporate governance?
A) The salary paid to senior employees for performing managerial tasks
B) The compensation paid to an executive based on the company’s profitability, including bonuses, stock options, and other benefits
C) The pension benefits paid to retired company executives
D) The performance bonuses given to employees who exceed sales targets
What is the role of “intellectual property rights” in business?
A) To protect a company’s ideas and inventions from unauthorized use by others
B) To prevent employees from leaving the company
C) To regulate the salary structure of employees
D) To allow businesses to avoid paying taxes on intellectual property sales
Which of the following best describes “utilitarianism” in business ethics?
A) The belief that businesses should only focus on maximizing profits
B) The ethical theory that businesses should make decisions based on the greatest good for the greatest number of people
C) The belief that ethics are relative to individual preferences
D) The view that a business’s only responsibility is to obey the law
What does the “Racketeer Influenced and Corrupt Organizations Act” (RICO) target in the context of business law?
A) Business corruption and illegal business practices like fraud, bribery, and money laundering
B) The protection of business mergers and acquisitions
C) The regulation of intellectual property theft
D) The oversight of product safety and consumer rights
Which of the following is a fundamental principle of “corporate social responsibility” (CSR)?
A) Prioritizing the reduction of operating costs above all other concerns
B) Maximizing profits at any cost
C) Operating a business in a way that balances the interests of shareholders, employees, the environment, and society
D) Ignoring the environmental impact of business operations
Which of the following describes “negligence” in business law?
A) An intentional act of harm caused to another party
B) A failure to exercise reasonable care that results in harm to another party
C) A violation of government regulations that results in harm to the environment
D) A legal term for fraudulent business practices
In which of the following scenarios would a business most likely face a lawsuit for “breach of contract”?
A) A business fails to disclose a potential risk factor to investors in a timely manner
B) A company fails to deliver goods or services as promised in a written agreement
C) A company discloses confidential business information to a competitor
D) A company increases its prices without informing customers
Which of the following best describes “unfair competition” in business?
A) Competitors engaging in deceptive practices that harm the market or mislead consumers
B) Competitors offering higher quality products at lower prices
C) Companies engaging in legal mergers and acquisitions
D) Companies respecting intellectual property laws
What is the purpose of the “Federal Food, Drug, and Cosmetic Act” in business law?
A) To regulate the prices of food and drugs sold in the U.S.
B) To ensure that food, drugs, and cosmetics are safe, sanitary, and labeled correctly
C) To promote the advertising of food and drug products
D) To provide guidelines for corporate governance in food and drug industries
Which of the following is an example of “contractual capacity” in business law?
A) The ability to understand the consequences of entering into a contract
B) The ability to draft legal documents
C) The ability to enforce a contract in court
D) The ability to break a contract without consequences
Which of the following defines “negligence” as it pertains to business law?
A) Acting with malicious intent to harm a business partner
B) The failure to take reasonable care in business operations, resulting in harm or damage
C) A deliberate violation of industry regulations
D) The act of intentionally breaking a contract to cause financial loss
Under the principle of “ethical relativism,” business ethics are determined by:
A) The laws of the country in which a business operates
B) The moral standards of the individual or organization, which may vary by culture or society
C) The company’s overall profitability
D) The demands of shareholders and investors
Which of the following is an example of “informed consent” in business ethics?
A) Employees agreeing to work overtime without knowing the associated risks
B) Consumers agreeing to a transaction after being fully informed of the terms, risks, and benefits
C) A corporation taking actions that benefit shareholders without considering customer impact
D) A company requiring employees to accept a non-disclosure agreement without providing details
In a business context, the concept of “fiduciary duty” requires executives to:
A) Protect the company’s intellectual property rights
B) Serve the best interests of the company and its shareholders above personal interests
C) Maximize profits even if it means violating ethical guidelines
D) Create policies that benefit employees more than shareholders
Which of the following is an example of “ethical egoism” in business decision-making?
A) A business decision made based on the greatest good for the greatest number of people
B) A business decision that primarily benefits the company, without considering the consequences for others
C) A business decision based on adherence to the law, regardless of outcomes
D) A business decision made to satisfy the ethical standards of society
Which of the following best describes a “consequentialist” approach to ethics in business?
A) Business decisions are ethical if they produce the best overall consequences for all stakeholders
B) Business decisions are ethical only if they comply with industry regulations
C) Business decisions are ethical only if they align with a company’s core values
D) Business decisions are ethical if they are in line with the personal moral code of the decision-maker
Which of the following actions would likely constitute a violation of intellectual property law?
A) A business using its own original designs to produce products
B) A company copying software code without permission from the original developer
C) A business entering into a licensing agreement for use of another company’s logo
D) A company patenting its own unique invention
Which of the following is a requirement for a legally enforceable contract?
A) The parties involved must have equal bargaining power
B) The contract must be signed in front of a notary public
C) The contract must include an offer, acceptance, and consideration
D) The parties must promise to be honest throughout the contract period
What is the role of “social responsibility” in business ethics?
A) To ensure the business focuses only on maximizing profits
B) To ensure the business engages in practices that benefit society and the environment while maintaining profitability
C) To ensure that businesses follow only the minimum legal requirements
D) To ensure businesses avoid paying taxes through legal loopholes
Which of the following is an example of “strict liability” in business law?
A) A manufacturer being held responsible for injuries caused by a product defect, regardless of fault
B) An employee being held responsible for damages caused by negligence
C) A business being liable for fraud if it intentionally misrepresents facts
D) A company being held liable for breaching a contract after violating its terms
Which of the following is true about the “fair use doctrine” under intellectual property law?
A) It allows individuals to use copyrighted materials for any purpose without permission
B) It allows the use of copyrighted materials for limited purposes such as commentary, criticism, or education without infringing copyright
C) It prohibits the use of any copyrighted work in any form
D) It permits the complete reproduction of copyrighted works for resale
Which of the following is a key principle of “corporate social responsibility” (CSR)?
A) Businesses should focus solely on maximizing profits
B) Businesses should invest in environmental sustainability, ethical labor practices, and social welfare in addition to profits
C) CSR is a strategy for businesses to avoid paying taxes
D) Businesses should avoid any form of regulation or external oversight
What is the primary purpose of “antitrust laws” in the U.S.?
A) To regulate environmental practices in business
B) To prevent businesses from engaging in practices that stifle competition and harm consumers
C) To regulate intellectual property rights for businesses
D) To allow businesses to form monopolies for efficiency purposes
Which of the following is an example of a “tort” in business law?
A) Breaching a legally binding contract with another business
B) Failing to pay taxes as required by law
C) A business causing harm to another party through negligence or intentional actions
D) A business implementing unfair pricing practices
What is the primary goal of “whistleblower protection” laws?
A) To encourage businesses to settle disputes outside of court
B) To protect employees from retaliation when reporting illegal or unethical practices within their organizations
C) To allow businesses to avoid paying fines for violations of the law
D) To provide legal immunity for businesses violating laws
Under the “Employee Retirement Income Security Act” (ERISA), what is the responsibility of employers?
A) To ensure that employees contribute at least 10% of their salary to retirement savings
B) To protect employees’ retirement benefits by providing transparent management and accounting for their pension plans
C) To set up mandatory retirement savings accounts for all employees
D) To automatically invest employee funds into company stocks
Which of the following defines “business ethics” in the context of corporate governance?
A) The guidelines for a business’s legal obligations
B) The set of moral principles that guide a business’s decision-making and operations
C) The rules for setting up a business partnership
D) The procedures for handling internal business disputes
Which of the following is an example of “duty of care” in business law?
A) A corporation must maximize profits at all costs
B) A corporation must act in the best interests of its stakeholders, including employees and customers, and minimize harm
C) A corporation must avoid paying taxes legally due
D) A corporation must prioritize its public image over its legal obligations
What is the “business judgment rule” in corporate governance?
A) A rule that allows business executives to disregard shareholder interests
B) A rule that protects corporate directors from liability for business decisions made in good faith, with reasonable care, and in the best interest of the company
C) A rule that mandates businesses must give priority to ethics over profits
D) A rule that allows business directors to make decisions based solely on their personal interests
Which of the following is a key characteristic of “civil law” as it pertains to business?
A) It involves the government prosecuting individuals for crimes
B) It focuses on disputes between private parties, typically over contracts, property, or torts
C) It is only applicable to businesses involved in international transactions
D) It focuses on criminal conduct and the protection of society
What is “strict product liability”?
A) The liability of manufacturers for defects in products that cause harm, regardless of fault or negligence
B) The responsibility of consumers to avoid defective products
C) The protection of a manufacturer from lawsuits due to product defects
D) The duty of businesses to warn consumers about potential risks
In a business partnership, which of the following is the primary responsibility of each partner?
A) To provide initial capital investment to the business
B) To act in the best interests of the business and share profits and losses
C) To serve as the sole decision-maker for business operations
D) To handle all legal liabilities and debts individually
Under U.S. law, the “fair use doctrine” for copyright permits the use of copyrighted material without permission for all of the following, except:
A) Educational purposes
B) Commercial purposes
C) Parody and satire
D) Commentary and criticism
Which of the following is an example of “bribery” in business ethics?
A) Offering a gift to a client to maintain a business relationship
B) Offering payment or gifts to influence a decision in one’s favor, violating ethical or legal standards
C) Giving a discount to a long-term customer
D) Offering an incentive for employees to reach sales targets
Which of the following is true about “intellectual property” law?
A) Intellectual property only applies to businesses involved in technology
B) Intellectual property laws protect ideas, inventions, and creative works from unauthorized use or duplication
C) Intellectual property can only be protected if it has been commercially successful
D) Intellectual property laws allow anyone to freely use patents and trademarks without restriction
Which of the following is an example of “conflict of interest” in business?
A) A CEO recommending a vendor because of a personal relationship with the owner, rather than based on the vendor’s qualifications
B) A company following all relevant laws and regulations in its operations
C) An employee participating in a team-building event hosted by the company
D) A business offering its employees a bonus for exceptional performance
Which of the following is a key characteristic of “environmental law” as it applies to business?
A) It requires businesses to make profit the primary objective, regardless of environmental impact
B) It provides guidelines for businesses to minimize their negative impact on the environment
C) It is only applicable to businesses involved in the manufacturing industry
D) It encourages businesses to ignore environmental regulations to maximize profit
Which of the following best defines the term “moral relativism” in business ethics?
A) The belief that moral principles are universal and should apply across all situations
B) The view that ethical behavior depends on individual or cultural perspectives and may vary
C) The belief that business should prioritize profit over ethical considerations
D) The view that businesses should adhere strictly to legal standards and regulations
Which of the following statements is true regarding the “business judgment rule”?
A) It gives business owners the right to make decisions that benefit their personal interests
B) It shields directors from liability as long as their decisions are made in good faith, with reasonable care, and in the company’s best interest
C) It allows directors to make decisions that benefit their friends and family over the company’s stakeholders
D) It requires business owners to prioritize shareholder profits over everything else, including ethics
What is the main purpose of the “Foreign Corrupt Practices Act” (FCPA)?
A) To regulate the sale of goods across national borders
B) To make it illegal for U.S. companies to bribe foreign officials in order to gain business advantages
C) To prevent international businesses from participating in environmental degradation
D) To ensure U.S. businesses pay their fair share of taxes overseas
What is the “doctrine of respondeat superior” in tort law?
A) It holds employees personally liable for the actions they take in the course of their work
B) It holds employers liable for the actions of employees when the actions are within the scope of employment
C) It allows businesses to sue their employees for workplace misconduct
D) It absolves employers of responsibility for employee actions during work hours
Which of the following is an example of a “business tort”?
A) A company breaching a contract with a customer
B) A company misrepresenting its products in advertising, resulting in harm to a competitor’s reputation
C) A company failing to pay its employees’ wages
D) A company negotiating a fair contract with a supplier
Under business ethics, “corporate transparency” means that a business:
A) Discloses all business operations and decisions openly to stakeholders, including financial information
B) Hides business practices to avoid scrutiny from competitors
C) Only provides information about its operations to investors
D) Keeps customer complaints private to maintain a positive image
Which of the following is a legal defense to a charge of defamation in business law?
A) The statement was false
B) The statement was made with malicious intent
C) The statement was made in good faith, without knowledge of falsity, and it was an opinion rather than a fact
D) The statement was made to cause financial harm to a competitor
In the context of business law, “due diligence” refers to:
A) The process of investigating a potential business opportunity or transaction to verify all facts and legal obligations
B) The act of ignoring relevant regulations to ensure a business transaction goes smoothly
C) A method of avoiding legal action by withholding information from stakeholders
D) The responsibility to maximize profits regardless of legal risks
Which of the following is a form of “alternative dispute resolution” (ADR) in business?
A) Filing a lawsuit in a court of law
B) Using arbitration or mediation to resolve a dispute outside of court
C) Ignoring the dispute and allowing it to resolve naturally
D) Seeking public opinion on social media to settle the issue
Which of the following is an example of “punitive damages” in business law?
A) A payment awarded to a plaintiff to compensate for losses suffered due to a business’s negligence
B) A monetary award intended to punish a business for malicious or egregious conduct, and deter future violations
C) A reimbursement of legal costs incurred during a lawsuit
D) A payment to restore an individual’s reputation damaged by a business’s actions
Which of the following is true about “insider trading” in business?
A) It is legal for employees to use non-public information to make stock market trades
B) It is illegal for business insiders to trade stocks based on confidential company information not available to the public
C) It is permissible if the insider receives permission from the government to trade
D) It only applies to companies involved in the tech industry
Which of the following is an example of “false advertising” in business?
A) Advertising a product with exaggerated claims that are not substantiated by evidence
B) Advertising a product with clear terms and conditions
C) Advertising a product with honest, factual descriptions
D) Advertising a product based on actual customer reviews