The doctrine of separation of powers basically requires that:

Choose one answer.

	a. the authority of state governments is superior to that of the federal government.
	b. each branch of the government plays its own role in governing.
	c. the authority of the president (the executive branch) is distinct from and superior to the other branches.
	d. each house of the US Congress has its own legislative authority.

Question 2

With regard to the powers of the president, the US Constitution:

Choose one answer.

	a. has provided clear and unambiguous limits.
	b. requires the president to consult with Congress before making major foreign policy decisions.
	c. is considered deliberately ambiguous.
	d. does not allow the president to use military force without congressional authorization.

Question 3

Under a federal system of government:

Choose one answer.

	a. power is centralized within the national government.
	b. power is held by independent states.
	c. the central government is a creation of regional governments.
	d. power is divided between a central government and local governments.

Question 4

The Supreme Court of the United States has held that in the American federal system:

Choose one answer.

	a. the federal government has supremacy over the states.
	b. the states have supremacy over the federal government.
	c. the authority of the states and of the federal government is equal.
	d. the states have no authority except what is granted by Congress.

Question 5

A rule of law system is a system:

Choose one answer.

	a. under which the government and people are bound by laws.
	b. that originated in the United States.
	c. allows predictability and the restraint of government action.
	d. Answers A and C are both correct.

Question 6

Examples of how the law affects finance include which of the following?

Choose one answer.

	a. The Truth in Lending Act
	b. Title VII of the Civil Rights Act
	c. Regulation by the Securities and Exchange Commission
	d. Answers A and C are both correct.

Question 7

What is the most important role of the Supreme Court of the United States?

Choose one answer.

	a. To interpret the US Constitution
	b. To make new laws
	c. To administer and enforce laws
	d. None of the above answers is correct.

Question 8

What do US District Courts mainly serve as?

Choose one answer.

	a. Appeals courts
	b. Administrative courts
	c. Trial courts
	d. Criminal courts

Question 9

The discovery process in litigation generally includes which of the following?

Choose one answer.

	a. The filing of pre-trial motions
	b. Voir dire
	c. Requests for the production of written communications
	d. The filing of pleadings

Question 10

A motion by which the defendant in a trial argues that even if one were to admit that everything in the complaint is factually true, that does not lead to legal liability, is called a motion:

Choose one answer.

	a. to dismiss for failure to state a cause of action.
	b. for judgment on the pleadings.
	c. to dismiss based on the statute of limitations.
	d. for summary judgment.

Question 11

At the trial stage of a legal case, which of the following can occur?

Choose one answer.

	a. The case can be dismissed based on the statute of limitations.
	b. The case can be dismissed for failure to state a cause of action.
	c. The judge can issue a judgment notwithstanding the verdict.
	d. Interrogatories may be submitted.

Question 12

Negotiation, arbitration, and mediation are:

Choose one answer.

	a. central to the pre-trial phase of litigation.
	b. part of the appeal process after trial.
	c. methods of alternative dispute resolution.
	d. all generally required in the litigation process.

Question 13

A sole proprietorship is a form of business in which:

Choose one answer.

	a. the business offers shares of stock to owners.
	b. owners are not liable for the debts of the business.
	c. the owner and the business are taxed separately.
	d. the owner and the business are legally identical.

Question 14

Which of the following business entities offer limited liability?

Choose one answer.

	a. Sole proprietorships
	b. General partnerships
	c. Corporations
	d. None of the above answers is correct.

Question 15

As a business entity, a corporation:

Choose one answer.

	a. is legally identical to its owners.
	b. is legally separate and distinct from its owners.
	c. has liability characteristics similar to a sole proprietorship.
	d. has liability characteristics similar to a partnership.

Question 16

Which of the following is a characteristic of a limited liability company?

Choose one answer.

	a. It is a hybrid form of business organization.
	b. Its owners are generally liable for debts of the entity.
	c. It has the same liability characteristic as general partnerships.
	d. It is taxed like a corporation.

Question 17

In filing articles of incorporation with a state's corporations division, which of the following MUST the filer do?

Choose one answer.

	a. List the name of all executive officers
	b. Explain in exact detail the purpose of the corporation
	c. State the price at which shares of stock will be offered
	d. List an agent for service of process

Question 18

In comparison with articles of incorporation, a certificate of formation filing generally differs because it requires the filer to:

Choose one answer.

	a. state whether the management of the entity will be vested in a manager or managers.
	b. state the name that will be given to the business organization.
	c. state a purpose for the formation of the business organization.
	d. provide the name and address of an agent for service of process.

Question 19

Which of the following elements are required to form a contract?

Choose one answer.

	a. Offer, acceptance, and exchange of money
	b. Offer, acceptance, and consideration
	c. Offer, counter-offer, and mutual assent
	d. Invitation to bargain, offer, and consideration

Question 20

If someone offers to sell you an iPad for $250 and you make a counter-offer of $150:

Choose one answer.

	a. your counter-offer will be considered an acceptance.
	b. your counter-offer binds the offeror.
	c. your counter-offer serves as a rejection of the seller's offer.
	d. you can still bind the offeror by later accepting the original offer of $250.

Question 21

Consider the following scenario and choose the correct answer from the options below.

You accept an employment contract for a term of one year with XYZ Corp. to design widgets, with a compensation of $75,000 for the year. Three weeks following your acceptance, your project supervisor presents you with a new contract that includes the requirement that you make coffee every morning.

If you sign the new contract, what will be the likely result?

Choose one answer.

	a. You will be bound to the new contract because you accepted the initial offer.
	b. You will not be bound to the new contract because your acceptance of the initial contract does not mirror the current offer.
	c. You will be bound to the new contract because the subject matter of the contract is legal.
	d. You will not be bound to the new contract because no additional consideration has been provided.

Question 22

You are offered an iPad for $250. You respond by telling the offeror, "I agree to buy the iPad for $250 if it does not rain tomorrow." What is the likely result of your statement in terms of whether this interaction constitutes a contractual agreement?

Choose one answer.

	a. There is no contract because the consideration is illusory.
	b. There is a valid contract because the consideration is valid.
	c. There is no contract because you have made a counter-offer.
	d. There is a valid contract because you will suffer a legal detriment.

Question 23

Consider the following scenario and choose the correct answer from the options below.

You are having your kitchen remodeled. You hire a contractor to put in new cabinets, tile the floor, and paint the walls green. When the contractor is done, you review the work and find that the contractor has painted the walls blue.

What will you likely need to do as a result of this scenario?

Choose one answer.

	a. You will not have to pay the contractor because he or she has breached the contract.
	b. You will have to pay the contractor the contract price, less the costs of repainting, due to the principle of substantial performance.
	c. You will have to pay the contractor because the error amounts to a material breach.
	d. You will have to pay the contractor because the breach is not material.

Question 24

Performance to the standard of personal satisfaction is:

Choose one answer.

	a. never enforceable.
	b. enforceable in service contracts.
	c. enforceable if the circumstances suggest that such a high standard is reasonable.
	d. enforceable if the contract explicitly requires it.

Question 25

In order to be considered negotiable, an instrument must meet which of the following requirements?

Choose one answer.

	a. It must be in writing and must be for a fixed or indefinite amount of money.
	b. It must be signed by the maker or drawer and must contain either a conditional or unconditional promise or order to pay.
	c. It must be an oral or written agreement with an unconditional promise or order to pay.
	d. It must be signed by the maker or drawer and must be payable to order or bearer, unless it is a check.

Question 26

A negotiable instrument must be signed by the maker or drawer. In practice, this means that:

Choose one answer.

	a. any symbol used with intent to authenticate the writing is acceptable.
	b. the signature must be executed in personal handwriting.
	c. a written personal signature must follow the terms of the instrument.
	d. only handwritten or stamped signatures are acceptable.

Question 27

Under the UCC, an instrument will not be negotiable if:

Choose one answer.

	a. it refers to another writing.
	b. it states an express condition.
	c. payment is limited to being from a specific source or fund.
	d. All of the above answers are correct.

Question 28

In order to meet the requirement that the secured party gives value for a security interest to attach, a creditor:

Choose one answer.

	a. must pay money.
	b. may accept delivery under a pre-existing contract for purchase.
	c. may provide any consideration that will create a valid contract.
	d. Answers B and C are both correct.

Question 29

Article 9 of the Uniform Commercial Code (UCC) governs security interests in all of the following categories EXCEPT:

Choose one answer.

	a. Goods
	b. Intangible property
	c. Land
	d. Indispensable paper

Question 30

Why must a secured party perfect the security interest?

Choose one answer.

	a. To prevent subordination to the rights of later lien-holders
	b. To allow the creditor to repossess the collateral
	c. To prevent others from learning about the security interest
	d. To ensure that there is an authenticating record

Question 31

Title VII of the Civil Rights Act of 1964 allows discrimination based on which demographic category?

Choose one answer.

	a. Race
	b. Religion
	c. Seniority
	d. Sex

Question 32

Fill in the blank to complete the statement below.

_____________________ impose/s on employers a general duty to provide a place of employment free from hazards that are likely to cause death or serious physical harm.

Choose one answer.

	a. Title VII of the Civil Rights Act
	b. The Fair Labor Standards Act
	c. Workers compensation laws
	d. The Occupational Safety and Health Act

Question 33

Under common law, an employee who does not have an employment contract:

Choose one answer.

	a. can be fired at any time.
	b. is protected from being fired by federal law.
	c. is treated no differently from an employee who does have a contract.
	d. cannot be discriminated against in employment.

Question 34

Consider the following scenario and choose the correct answer from the options below.

You go to a job interview for a new position at a company. The position is not subject to a written contract. The Human Resources manager says the company will offer you an initial compensation of $40,000 annually. However, when you receive your first paycheck, you find that you are making only $30,000 annually.

If you consider taking legal action as a result of this pay discrepancy, which of the following will be a likely result of this scenario?

Choose one answer.

	a. You will not have a cause of action because you are an at-will employee.
	b. You may have a cause of action for an enforceable oral promise.
	c. You will not have a cause of action because employment contracts must be in writing.
	d. You may have a cause of action because this situation goes against public policy.

Question 35

According to the National Labor Relations Act, workers participating in interstate commerce:

Choose one answer.

	a. are at-will employees.
	b. can be fired for attempting to form a union.
	c. have the right to bargain collectively.
	d. cannot engage in concerted activities in violation of antitrust laws.

Question 36

Which of the following is one of the six unfair labor practices of unions prohibited by the Taft-Hartley Act?

Choose one answer.

	a. Collective bargaining
	b. Union organizing
	c. Strikes
	d. Secondary boycotts

Question 37

What type of property includes land, as well as certain things attached to land?

Choose one answer.

	a. Real property
	b. Personal property
	c. Chattel
	d. Fungible property

Question 38

In addition to land, what can real property include?

Choose one answer.

	a. Certain things attached to land
	b. Subsurface rights
	c. Plants and trees severed from the land
	d. Answers A and B are both correct.

Question 39

What is chattel?

Choose one answer.

	a. Intangible personal property
	b. Moveable tangible personal property
	c. Property that can easily be substituted by other property
	d. Real property

Question 40

A finder of personal property may claim ownership of the property if the property has been:

Choose one answer.

	a. Lost
	b. Mislaid
	c. Abandoned
	d. None of the above answers is correct.

Question 41

A trademark:

Choose one answer.

	a. is invalid if it becomes associated with a class of goods.
	b. remains valid forever.
	c. must refer to a class of goods.
	d. is invalid if it refers to a specific producer or origin.

Question 42

One common defense to a claim of patent infringement argues that:

Choose one answer.

	a. the patent is only a business method patent.
	b. the patent is not valid.
	c. the patent is for a living thing and therefore is invalid.
	d. Answers A and C are both correct.

Question 43

If a tortfeasor knows with substantial certainty that certain consequences will result from his or her act, the tort he or she is liable for is:

Choose one answer.

	a. Negligence
	b. Strict liability
	c. An intentional tort
	d. A breach of contract

Question 44

In an action for negligence, if the plaintiff proves that the defendant has had (1) a duty of care, (2) a breach of that duty, and (3) causation, he or she will still have to prove:

Choose one answer.

	a. Intent
	b. Recklessness
	c. Strict liability
	d. Injury

Question 45

In strict liability, any retailer, wholesaler, or manufacturer is strictly liable if it:

Choose one answer.

	a. sells an unreasonably dangerous product.
	b. breaches a duty of care.
	c. sells a product with an intent to harm someone.
	d. sells a product to someone who has assumed the risk.

Question 46

Why must businesses be vigilant against white-collar crime?

Choose one answer.

	a. White-collar crime generally involves violence.
	b. There is no absolute way to identify those who might turn toward criminal behavior in the workplace.
	c. Such crime involves typical street crimes, such as burglary or robbery.
	d. White-collar crimes are person-to-person crimes.

Question 47

Fill in the blanks to complete the statement below.

The burden of proof in a criminal case is ______________, while the burden of proof in a civil tort case is generally ________________.

Choose one answer.

	a. preponderance of the evidence; beyond a reasonable doubt
	b. clear and convincing evidence; preponderance of the evidence
	c. beyond a reasonable doubt; preponderance of the evidence
	d. beyond a reasonable doubt; clear and convincing evidence

Question 48

When someone takes property that was in his or her possession but that he or she does not own and converts it to his or her own use, what crime has that person committed?

Choose one answer.

	a. Larceny
	b. Operating a Ponzi scheme
	c. A RICO violation
	d. Embezzlement

Question 49

Fill in the blank to complete the statement below.

The most significant impact of the _______________________ is the requirement that federal agencies prepare an environmental impact statement in every recommendation for or report on proposals for legislation, as well as whenever undertaking a major federal action that significantly affects environmental quality.

Choose one answer.

	a. The National Environmental Policy Act
	b. The Clean Water Act
	c. The Marine Protection, Research, and Sanctuaries Act
	d. The Resource Conservation and Recovery Act

Question 50

Fill in the blank to complete the statement below.

The _______________________ governs private industry and imposes stringent standards on the discharge of pollutants into waterways and publicly owned sewage systems.

Choose one answer.

	a. The Environmental Protection Act
	b. The Clean Water Act
	c. The Marine Protection, Research, and Sanctuaries Act
	d. The Resource Conservation and Recovery Act

Question 51

What did the two most important sections of the Sherman Antitrust Act do?

Choose one answer.

	a. They required a partnership between government and business.
	b. They focused on government-business cooperation in order to regulate trade.
	c. They prohibited combinations in restraint of trade and monopolizing.
	d. They established the Federal Trade Commission and gave it regulatory authority.

Question 52

In order to comply with the Securities Act of 1933, a company issuing securities to the public must generally register the securities with the Securities and Exchange Commission, as well as:

Choose one answer.

	a. demonstrate that there is an expectation of profit.
	b. undergo a merit review.
	c. demonstrate that the offering is fair and just and will provide a fair return.
	d. disclose material information about the offering.

Question 53

As a result of the Sarbanes-Oxley Act, public companies:

Choose one answer.

	a. have been required to take on significant regulatory obligations.
	b. may employ any auditors they choose.
	c. are required to have independent audit committees.
	d. Answers A and C are both correct.

Question 54

Consider the following scenario and choose the correct answer from the options below.

An executive of ABC Corporation, a publicly traded corporation, is presented with the company's financial statements for certification. She notices that some of the debts of the company have been assigned to shell companies in an attempt to hide the company's debt and create the appearance that the company has a higher income than it actually does.

If the executive certifies the financial statements, she may face a maximum of:

Choose one answer.

	a. 20 years in prison
	b. 15 years in prison
	c. 10 years in prison
	d. 25 years in prison

Question 55

A key component of recent corporate governance reforms has been:

Choose one answer.

	a. the adoption of the Sarbanes-Oxley Act.
	b. the voluntary adoption of reforms by public corporations.
	c. action by independent auditors to reign in abuses.
	d. None of the above answers is correct.

Question 56

In light of the Sarbanes-Oxley Act, _______________________ is/are required to take a more active role in corporate governance within companies.

Choose one answer.

	a. senior finance executives
	b. shareholders
	c. the audit committee
	d. Answers A and C are both correct.

Question 57

Consider the following scenario and choose the correct answer from the options below.

A corporation recently adopted in-depth regulatory compliance guidelines. To oversee the implementation of the guidelines, the company has assigned responsibility to a middle manager who is also responsible for overseeing the company's extensive team of Northwest region sales representatives. The middle manager has not been given a raise in her compensation, nor an increased budget, for her new duties.

How would you assess the company's compliance efforts as described above?

Choose one answer.

	a. The company is not meeting its obligations. Compliance oversight should be assigned to a senior executive with adequate time, financial resources, and board access - not to a middle manager.
	b. As long as the compliance efforts address all high-priority areas, the company is meeting its obligations.
	c. The company has met its obligations by appointing an officer to oversee ethics and compliance.
	d. The company's compliance success depends on the middle manager. The middle manager must set the correct tone in these efforts. If she does, the program will be a success. If she does not, it will fail.

Question 58

DEF Corporation has just issued an ethics code. The code addresses the company's responsibilities to its employees, shareholders, suppliers, and customers. What other group should the code address?

Choose one answer.

	a. Competitors
	b. The community at large
	c. The government
	d. Executive officers

Question 59

An important goal of a regulatory compliance program is to:

Choose one answer.

	a. protect corporate officers from liability.
	b. reduce the need for a corporation's board to take action.
	c. promote board action when red flags arise.
	d. ensure that the goals of the board and the audit committee are the same.

Question 60

Which of the following might raise an ethical red flag for a corporation's board?

Choose one answer.

	a. Low levels of litigation against the corporation
	b. The audit committee exercising direct responsibility for the appointment of independent auditors
	c. A thorough review of a potential issue, followed by the decision that there is no problem
	d. The creation of a "culture of fear" that penalizes internal debate