1
CONCEPT
8/23 that's 35%
RETAKE THIS PRACTICE MILESTONE
8 questions were answered correctly.
15 questions were answered
incorrectly
.
The CEO of a struggling telecommunications company instructs the corporation’s accountants to use fraudulent
accounting methods to mask its losses. The CEO wants to drive up the stock price, which has been falling steadily
for several months, especially since his salary is tied to stock performance. When an accountant approaches the
Board of Directors with concerns about this directive, the Board listens politely and then does nothing.
Consider what you have learned about the factors that impact corporate culture. What is the ethical strength of
the corporation in the example?
Weak, because the company is "killing the messenger."
Weak, because the company's leadership is not holding wrongdoers
accountable.
Strong, because the Board's inactions results in increased value to
shareholders.
Strong, because the corporation has a way for employees to report
ethical or legal breaches anonymously.
UNIT 1 — PRACTICE MILESTONE 1
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8/23
Corporate Culture and Codes of Ethics
2
CONCEPT
Minimizing Corporate Criminal Liability
3
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A corporation becomes aware of an active FBI investigation of the company when agents produce a search
warrant for several employees' computers. After the investigation results in a conviction and a substantial fine, the
corporation rethinks its approach to ethics in the future.
Select the strategy that would be
least effective in reducing the company's criminal liability.
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Select the true statement about the relationship between the different court systems in the U.S.
It could encourage a corporate culture of ultimate loyalty to the
company.
It could research federal sentencing guidelines to develop
processes for detecting legal violations.
It could provide increased employee training on how to be vigilant
against criminal behavior.
It could financially incentivize individuals to speak up when they
witness unethical or illegal decision-making.
CONCEPT
The Courts and the Legal Process
4
CONCEPT
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Which of the following best characterizes the law?
You can only file a case dealing with constitutional law in the federal
court system.
Plaintiffs can never choose which court they would like to hear their
case.
Cases may be filed in both courts simultaneously.
State courts are sometimes concerned with federal law and federal
courts are sometimes concerned with state law.
It is a set of norms determined by society.
It is a set of requirements based on morality.
It is a set of rules enforced by a government authority.
It is a set of suggestions for living.
What Is Law?
5
CONCEPT
The Trial
6
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Select the correct order of procedure for criminal and civil trials in the U.S.
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All law in the U.S. can be classified as __________.
Opening statements, witness testimony and cross examination, jury
selection, jury instructions, closing arguments, verdict, post-trial
motions
Jury selection, jury instructions, opening statements, witness
testimony and cross examination, verdict, closing arguments, post-
trial motions
Jury selection, opening statements, witness testimony and cross
examination, closing arguments, jury instructions, verdict, post-trial
motions
Opening statements, jury selection, jury instructions, witness
testimony and cross examination, closing arguments, verdict, post-
trial motions
CONCEPT
U.S. Positive Law
8
The term "U.S. positive law" refers to __________.
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Y Corporation uses the Josephson core values model when it needs to make an important corporate decision.
After careful analysis of a range of choices and their impact on the various stakeholders, it's determined that no
decision will satisfy the greatest number of core values.
According to the model, what should Y Corporation do next?
all of the laws that have been enacted
only laws that the people consider "good"
all social norms and customs
civil law, but not criminal law
Make a decision that favors the most important stakeholder.
Abandon the model because it cannot assist with resolving the
issue at hand.
Make a decision that all stakeholders will ultimately agree with.
CONCEPT
Major Ethical Perspectives
10
Marta is applying for financial analyst positions after having stayed at home to care for her aging mother for four
years. She has not received any interviews yet and is feeling frustrated, so she puts a fake employer on her
resume to make it look like she's only stopped working for two years.
How would a virtue ethicist evaluate this decision?
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Select the case that would clearly be under the exclusive subject matter jurisdiction of the federal courts.
Marta is acting unethically because she is not expressing the quality
of honesty.
Marta is acting unethically because if everyone lied on their
resumes, no one would be able to believe anyone's resume.
Marta is acting unethically because, while it may end well for her if
she gets the job, lying has a social cost that exceeds her personal
benefit.
Marta is acting unethically because there may be another, better-
qualified candidate who could be harmed by her lie.
Counterfeiting
Motor vehicle theft
CONCEPT
Subject Matter Jurisdiction
11
CONCEPT
What Is Ethics?
12
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Businesses that strive to be __________ are viewed most favorably by the marketplace.
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Which of the following correctly orders the progress of a criminal trial through the federal court system?
Arson
Defamation
ethically sound
legally compliant and ethically sound
profitable regardless of legal and ethical requirements
legally compliant
CONCEPT
Federal Courts in the U.S.
13
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U.S. Circuit Court, U.S. Supreme Court, U.S. District Court
U.S. Circuit Court, U.S. District Court, U.S. Supreme Court
U.S. District Court, U.S. Supreme Court, U.S. Circuit Court
U.S. District Court, U.S. Circuit Court, U.S. Supreme Court
CONCEPT
Legislation and Other Sources of Law
14
Congress has authority over which of the following sources of law?
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A pharmaceutical company establishes a philanthropic program that provides free prescription drugs to health
clinics that serve low-income populations. The CEO of the company has made this program the centerpiece of a
new marketing campaign, and the company's stock price has skyrocketed as a result of its growing reputation as a
socially responsible company.
According to Milton Friedman, did the corporation fulfill its duty?
Statutory law and administrative law
Only statutory law
Common law and administrative law
Only common law
Yes, because the CEO is fulfilling his or her fiduciary duty to the
directors and shareholders of the company.
No, because the company is seeking to profit from its charitable
giving.
Yes, because the company is looking out for the well-being of
CONCEPT
Corporate Governance
15
CONCEPT
Corporations
16
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Fiduciary duty within a corporation applies to whom?
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The main purpose of mediation is to facilitate __________.
people in local communities.
No, because the CEO has decided to give away prescription drugs
rather than selling them.
Directors only
Directors and officers
Officers and shareholders
Directors, officers, and shareholders
CONCEPT
Law in Business
18
Understanding the legal environment of a business is essential __________.
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How does a limited partnership differ from a general partnership?
only to minimize liability exposure
only in a business in which liability exposure is great
if a business intends to act unethically
to manage liability exposure and protect the public
In a limited partnership, only one partner can reap the profits of the
business.
In a limited partnership, there is only one business owner.
In a limited partnership, all partners are equally responsible for the
business' losses.
In a limited partnership, the limited partner's liabilitycannot exceed
his or her investment in the business.
CONCEPT
Sole Proprietorships and Partnerships
19
CONCEPT
Personal Jurisdiction
20
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Personal jurisdiction is possible over the objection of an out of state defendant __________.
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Why are limited liability companies known as a "hybrid" form of business organization?
at anytime and for whatever reason
if the court believes that justice would be served
under due process if the defendant has sufficient connecting
activities in the state
if the plaintiff personally requests it
Because they are most often used when two businesses wish to
join together and create a new, single business
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CONCEPT
Limited Liability Entities
21
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Because they combine the limited liability of corporations with the
tax treatment of a sole proprietorship or general partnership
Because liability within an LLC is shared between the company and
its members
Because an LLC can choose to pay both corporate income taxes
and personal income taxes if it wishes
CONCEPT
Business Organizations
22
CONCEPT
State Courts in the U.S.
Which of the following is a consideration when choosing a form of business organization?
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Which level of state court reviews a lower court’s theory of the applicable law?
The number of competitors in the industry
The originality of the business concept
The long-term vision for the business
The likelihood of the business being profitable
General jurisdiction court
Limited jurisdiction court
District court
Supreme court
23
CONCEPT
U.S. Constitution as a Source of Law
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The U.S. Constitution can best be described as __________.
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a means of organizing the four main branches of government
a document which gives unlimited authority to the federal
government
a secondary source of law that influences those who make laws
a foundation for government that limits the concentration of power
in any one source
