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Exam #3 is on Thursday July 3. There is a quiz on Wednesday, July 2, on Chapter 21, International Law.
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Sample Exam #3
1. Which of the following is not part of the Howey test?
a. the investment of money
b. in a common enterprise
c. with an expectation of profits
d. not generated through the efforts of the investors
e. all of the above are part of the Howey test
2. An agency relationship
a. must be in writing
b. can be created by estoppel
c. can never be terminated without the consent of both parties
d. all of the above
3. In a liquidation bankruptcy, the person in the worst situation is usually
a. an employee due unpaid wages
b. an unsecured creditor
c. a secured creditor
d. the attorney for the debtor
4. Which of the following is not a basic part of the agency relationship?
a. it must be created by contract
b. the agent is subject to the principal's control
c. the agent is a fiduciary
d. the agent acts on behalf of the principal
5. State securities laws:
a. are forbidden under the federal supremacy clause
b. are referred to as red herring laws
c. are referred to as blue sky laws
d. none of the above
6. What fiduciary duty, if any, exists in an agency relationship?
a. there is no fiduciary duty in an agency relationship
b. the agent owes a fiduciary duty to the principal
c. the principal owes a fiduciary duty to the agent
d. the agent owes a fiduciary duty to third parties with whom the agent deals
on behalf of the principal
7. The statute that requires U.S. companies "to make and keep books, records, and
accounts which, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of [their] assets," and which requires them to "maintain internal
accounting controls" is the
a. Securities Act of 1933
b. Securities Exchange Act of 1934
c. Foreign Corrupt Practices Act
d. none of the above
8. In an agency coupled with an interest:
a. the principal can terminate the agency without liability
b. the principal terminate the agency but may be liable for damages
c. the agent pays for the right to exercise authority for a business
d. none of the above
9. A disclosed principal is one whose identity is:
a. known to the agent
b. unknown to the agent
c. unknown to third parties to contracts entered into with the agent
d. known to third parties to contracts entered into with the agent
10. When there is a partially disclosed principal:
a. only the agent is liable if the principal defaults
b. only the principal is liable if the principal defaults
c. the injured third party can sue either the principal or the agent if the principal
defaults
d. the injured third party can't sue either the principal nor the agent if the
principal defaults
True - False
11. A "letter of credit" is an agreement or assurance by the bank of the buyer, in an international commercial transaction, to pay a specified amount to the seller (usually via the seller's bank) upon receipt of certain documents that prove that the goods have been shipped and that contractual obligations of the seller have been fulfilled.
12. Under our securities laws only stocks and bonds are considered securities.
13. The officers of a corporation are elected by the shareholders.
14. Actual authority of an agent may either be express or implied.
15. A partner who has no real authority to run the business can still bind the partnership to third parties if apparent authority exists.
16. A limited partner cannot participate in the day-to-day management of the business; if she does she will lose her limited liability protections.
17. Subchapter S corporations and limited liability companies are essentially subject to the same income tax treatment as partnerships.
18. A "force majeure" clause excuses a party from an inability to perform a contract when that inability was caused by a superior or irresistible force - a so-called "Act of God."
19. The Doctrine of Sovereign Immunity may hinder you if you suffer losses due to the actions of a foreign government and attempt to recover your losses in your home country's courts.
20. All employees of a corporation are also agents of that corporation.
21. The anti-fraud provisions of the 1933 and 1934 securities statutes are alike in that they both require intent to deceive on the part of the defendant.
22. One of the major insider trading cases in the 1980s involved Ivan Boesky and junk bond king, Malcolm Veuleman.
23. Other members must consent to the transfer of an ownership interest in a limited liability company.
24. McDonald's is a commonly cited example of a "business format franchise."
25. A limited partnership is another name for a joint venture.
26. By law, the death of a majority stockholder causes a corporation to be dissolved.
27. In a general partnership all of the partners have personal liability for debts of the business.
28. The Plaintiff must show that she relied on the material misstatement in order to have a legitimate cause of action under both Section 11 and Rule 10(b)-5.
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We will go over the sample exam on Wednesday.
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