Which of the following statements is NOT true about stockholders? | A. They are the legal owners of business corporations. | | | B. They own equal shares of company assets. | | | C. They are the part owners of the company. | | | D. Managers pay close attention to their needs and interests. | |
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Institutional investors are sometimes referred to as: | A. Main Street investors. | | | B. Wall Street investors. | | | C. inside investors. | | | D. outside investors. | |
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In the mid- to late-1990s the stock market was a: | A. bull market. | | | B. market in which share prices fell overall. | | | C. bear market. | | | D. None of the above | |
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Corporate governance involves the exercise of control over a company's: | A. finance and accounting departments. | | | B. entire operations. | | | C. manufacturing facilities. | | | D. marketing and human resources departments. | |
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The directors of a company are a central factor in corporate governance because they: | A. exercise formal legal authority over company policy. | | | B. have the highest stake in the performance of the company. | | | C. have a moral responsibility to fulfill the needs of both the company's employees and customers. | | | D. inherited the business from their predecessors. | |
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What was a major contributor to the collapse of Enron in 2001? | A. The company's top executives made bad investments. | | | B. Several failed merger attempts with other firms. | | | C. Lax oversight by the company's audit committee. | | | D. The bear market of the early 2000s. | |
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How are directors (members of corporate boards) selected? | A. Shareholders elect the directors from a list of candidates. | | | B. The company's CEO appoints the directors. | | | C. The nominating committee elects the directors. | | | D. Shareholders with the greatest proportional ownership in the company become directors. | |
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The "agency problem" arises when: | A. owners manage their company on their own behalf. | | | B. there is no separation of ownership and control in a company. | | | C. managers act in their own interest, rather than in the interest of shareholders. | | | D. shareholders act in their own interest, rather than in the interest of the board. | |
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A reason for institutions becoming more assertive in promoting the interests of their member investors is: | A. it is difficult for institutions to sell their holdings. | | | B. their members want them to. | | | C. institutions have greater flexibility in selling stocks. | | | D. institutions have nominated members on the finance committee of the board of directors. | |
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The mission of the Securities and Exchange Commission (SEC) is to: | A. protect shareholders' rights by making sure that stock markets are run fairly. | | | B. protect companies from hostile takeovers. | | | C. ensure that institutional investors do not take control of company management. | | | D. ensure that the federal treasury receives its share of the revenues from stock trading. | |
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The Securities and Exchange Act of 1934 outlaws: | A. any manipulative or deceptive device used to trade stocks. | | | B. compensating company executives with stock options. | | | C. trading in stocks by institutions. | | | D. buying stock in a company for which you work. | |
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Which organization brings together 300 nonprofit groups to espouse the consumer viewpoint? | A. Consumers Union | | | B. Consumer Federation of America | | | C. National Consumer League | | | D. Public Citizen | |
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A goal of the consumer movement is to make consumer power: | A. exceed the rights and powers of firms that sell goods and services. | | | B. exceed the rights and powers of the Food and Drug Administration. | | | C. an effective counterbalance to the rights and powers of firms that sell goods and services. | | | D. an effective counterbalance to the rights and powers of the Food and Drug Administration. | |
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Which of the following is a core right of consumers? | A. The right to safety | | | B. The right to be represented | | | C. The right to purchase | | | D. The right to return goods. | |
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Manufacturers making false or misleading claims about a competitor's product is: | A. illegal but ethical. | | | B. illegal and unethical. | | | C. legal but unethical. | | | D. legal and unethical. | |
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Online shoppers have always been concerned that: | A. they receive online ads for products similar to the ones they bought earlier on the Web. | | | B. their favorite Web sites provide a large variety of products and services. | | | C. the government might become overly involved in protecting consumer privacy. | | | D. information they reveal in the course of a sales transaction might be misused. | |
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Which organization advocates the adoption, by businesses, of voluntary policies for protecting the privacy of individuals' information disclosed during electronic transactions? | A. Online Privacy Alliance | | | B. Web Site Alliance | | | C. Open Profiling Standard | | | D. Federal Trade Commission | |
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The burden of responsibility for product performance has shifted to the producer, under the legal doctrine of: | A. rational liability. | | | B. product liability. | | | C. consumer liability. | | | D. supplier liability. | |
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Under proposals to establish uniform federal standards for determining liability: | A. plaintiffs would be discouraged from proceeding to trial. | | | B. companies would not have to go through repeated trials on the same charges in different states. | | | C. judges rather than juries would determine the original amount of punitive damages. | | | D. consumers would have to prove that a manufacturer knew or should have known that a product design was defective. | |
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In some cases, businesses have banded together to agree on how they will treat their customers. This is called: | A. the code of regulation. | | | B. the consumer affairs doctrine. | | | C. voluntary industry codes of conduct. | | | D. industry action standards. | |
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