Question 1

Jill is an established author. When she enters into contracts with her publisher or with bookstores and colleges to do readings, she has a person who acts on her behalf to obtain the best possible contract terms. The person who helps Jill with her contract terms is most likely

Accepted Answer

In this scenario, the person who helps Jill obtain the best possible contract terms is her agent. An agency is a common business relationship created when one person acts on behalf of another and under that person's control. In an agency relationship, the principal is the one who wishes to have a specific task accomplished and the agent is the one who acts on behalf of the principal to accomplish the task.

Question 2

Which of the following is NOT a reason that an agency relationship would be terminated?

Accepted Answer

An agency relationship continues as long as both the principal and the agent so desire. It can be terminated by mutual agreement, fulfillment of the purpose of the agency, the refusal of either party to continue in the relationship, or the death of either the principal or the agent. In most cases, a principal grants authority to the agent through a formal power of attorney, which is a legal document authorizing a person to act as someone else's agent. Granting a power of attorney does not terminate the agreement.

Question 3

Missy buys a house with three acres and a barn. In this case, the house, acreage, and barn are considered to be ________ property.

Accepted Answer

In this example, the house, acreage, and barn are real property, which consists of real estate and everything permanently attached to it.

Question 4

________ property consists of rights and duties, such as accounts receivable, stock in a corporation, goodwill, and trademarks.

Accepted Answer

Intangible property consists of rights and duties; its existence may be represented by a document or by some other tangible item. For example, accounts receivable, stock in a corporation, goodwill, and trademarks are all considered to be intangible personal property.

Question 5

Tina is a singer and songwriter who has released an album of her songs. What protects her ownership rights on this material?

Accepted Answer

Copyrights protect the ownership rights on material (often intellectual property) such as books, music, videos, photos, and computer software. The creators of such works, or their heirs, generally have exclusive rights to the published or unpublished works for the creator's lifetime, plus 50 years.

Question 6

The most intense competition for patents is in the ________ industry.

Accepted Answer

Patents give inventors exclusive rights to their invention for 20 years. The most intense competition for patents is in the pharmaceutical industry. Most patents take a minimum of 18 months to secure.

Question 7

The visual appearance of a product or its packaging is called

Accepted Answer

A trade dress refers to the visual appearance of a product or its packaging. In order for visual characteristics to receive protection as intellectual property, consumers must strongly associate the shape or design with the product itself.

Question 8

When businesses take on too much debt to finance growth or experience a business event such as an increase in the cost of commodities, an option of last resort is

Accepted Answer

Although few businesses and individuals intentionally fail to repay (or default on) their debts, sometimes they cannot fulfill their financial obligations. Businesses may take on too much debt in order to finance growth, or business events such as an increase in the cost of commodities can bankrupt a company. An option of last resort in these cases is bankruptcy, or legal insolvency.

Question 9

Which statement is TRUE regarding bankruptcy?

Accepted Answer

Individuals or companies may ask a bankruptcy court to declare them unable to pay their debts and thus release them from the obligation of repaying those debts. In the case of a personal bankruptcy, although the individual is released from repaying debts and can start over with a clean slate, obtaining credit after bankruptcy proceedings is very difficult. Although the person or company in debt usually initiates bankruptcy proceedings, creditors may also initiate them.

Question 10

A company is unable to pay its debts to its creditors. It files bankruptcy to free it from its financial obligations while it reorganizes and works out a payment plan with its creditors. During the bankruptcy proceedings, the company continues to operate, and it sells off some assets to raise cash to pay off its immediate obligations. Which type of bankruptcy does this scenario best describe?

Accepted Answer

In this scenario, the company is filing Chapter 11 bankruptcy. This type of bankruptcy temporarily frees a business from its financial obligations while it reorganizes and works out a payment plan with its creditors. The indebted company continues to operate its business during bankruptcy proceedings. Often, the business sells off assets and less-profitable subsidiaries to raise cash to pay off its immediate obligations.

Question 11

Darius is a member of the board of directors for MotorWorks, an auto manufacturer. He wants to hold a seat on the board of a competing auto manufacturer. What Act would prohibit him from doing so?

Accepted Answer

The Clayton Act of 1914 prohibits specific practices such as price discrimination, exclusive dealer arrangements, and stock acquisitions in which the effect may notably lessen competition or tend to create a monopoly. In addition, this Act prohibits members of one company's board of directors from holding seats on the boards of competing corporations.

Question 12

Which statement describes the Wheeler-Lea Act of 1938?

Accepted Answer

The Wheeler-Lea Act of 1938 prohibits unfair and deceptive acts and practices regardless of whether competition is injured. It also places advertising for foods and drugs under the jurisdiction of the FTC.

Question 13

What might some people consider to be an improper use of the Internet for business purposes?

Accepted Answer

The use and dependence on the Internet is increasingly creating a potential legal problem for businesses. With this growing use come questions of maintaining an acceptable level of privacy for consumers and proper competitive use of the medium. Some might consider that tracking individuals who visit their website by attaching a "cookie"
(identifying you as a website visitor for potential recontact and tracking your movement throughout the site) is an improper use of the Internet for business purposes.

Question 14

What law restricts unsolicited e-mail advertisements?

Accepted Answer

One law aimed specifically at advertising on the Internet is the CAN-SPAM Act of 2004. This Act restricts unsolicited e-mail advertisements by requiring the consent of the recipient. Furthermore, the CAN-SPAM Act follows the "opt-out"
model wherein recipients can elect not to receive further e-mails from a sender simply by clicking on a link.

Question 15

Ryan is a 12-year-old boy who enjoys going on the Internet and playing online games. To play the online games, he has to enter one of this parent's credit card numbers, as well as personal information like his birthday and Social Security number. What is a rising problem among children who use the Internet to which Ryan may fall victim?

Accepted Answer

Identity theft has increased due to the proliferation of the use of the Internet. A disturbing trend is how many children had their identities stolen. One study of 40,000 children revealed that 10 percent had their Social Security numbers stolen.

Question 16

Autumn Love, a large clothing store, has noticed a copyright issue on the Internet. It sees that the web address of another retailer matches Autumn Love's company trademark. What law can help Autumn Love address this issue?

Accepted Answer

The Federal Trademark Dilution Act of 1995 can help Autumn Love resolve this issue. This act provides trademark owners the right to protect trademarks, prevents the use of trademark-protected entities, and requires the relinquishment of names that match or closely parallel company trademarks.

Question 17

Jonas is a software developer who works for SuperTech, a large technology company. Feeling the pressure to develop a new type of software, he steals an idea from a competitor and develops it as his own software. Under the new Federal Sentencing Guidelines for Organizations, who would be held accountable for Jonas's misconduct?

Accepted Answer

In this scenario, both Jonas and SuperTech would be held accountable for his misconduct. Under the new guidelines established by the Federal Sentencing Guidelines for Organizations, both the responsible employees and the firms that employ them are held accountable for violations of federal law. Thus, the government now places responsibility for controlling and preventing misconduct squarely on the shoulders of top management.

Question 18

Based on a 2010 amendment to the Federal Sentencing Guidelines for Organizations, a company's board of directors must do all of the following EXCEPT

Accepted Answer

A 2010 amendment to the Federal Sentencing Guidelines for Organizations directs ethics officers to report directly to the board of directors. The board must ensure that there is a high-ranking manager accountable for the day-to-day operational oversight of the ethics program. The board must provide for adequate authority, resources, and access to the board or an appropriate subcommittee of the board. The board must ensure that there are confidential mechanisms available so that the organization's employees and agents may report or seek guidance about potential or actual misconduct without fear of retaliation. Finally, the board is required to oversee the discovery of risks and to design, implement, and modify approaches to deal with those risks.

Question 19

In the realm of influencer marketing, what must people who are considered to be "influencers" do in order to comply with FTC rules for online advertising and marketing?

Accepted Answer

The FTC rules for online advertising and marketing are the same as any form of communication or advertising. These rules help maintain the credibility of the internet as an advertising medium. Influencer marketing is relatively new compared with other forms of digital marketing, so it should be no surprise there have been road bumps for early adopters. Due to concerns about dishonest advertising, the FTC requires influencers to clearly disclose any connection they have with brands they promote. Neglecting to make a disclosure is viewed as deceptive advertising

Question 20

Milton Manufacturing has a comprehensive compliance program to deter its employees from engaging in misconduct. All of the following are typical components of such a program EXCEPT

Accepted Answer

Typical components of a compliance program include codes of ethics, employee ethics training, hotlines, compliance directors, newsletters, brochures, and other communication methods.

Quiz 17: Personal Financial Planning and Legal and Regulatory Environment