Q1: Prior to the Financial Crisis of 2008, banks relied on misleading ratings of bonds to make investment decisions.During Congressional investigations following the crisis, ratings agencies were careful to call their ratings "opinions" instead of "facts."This was to protect themselves from charges of

Group of answer choices

tipping

fraud

misappropriation

insider trading

Q2: Fred, a lawyer, hires Eve to do some remodeling work in his office. While working, Eve drops a tool on Olive, Fred's customer, causing an injury. Fred is probably

Group of answer choices

liable to Olive because Eve is Fred's employee.

not liable to Olive because Eve is an independent contractor.

not liable to Olive unless Eve's act was intentional.

liable to Olive because the injury happened in Fred's scope of employment.

Q3: Under the business judgment rule, a director or officer can be held legally liable for bad (mistaken) business decisions.

Group of answer choices

False

True

Q4: The Civil Rights Act of 1964 prohibits job discrimination against minorityandmajority group individuals, such as white males.

Group of answer choices

False

True

Q5: Dennis, an accountant, is not an employee for Rising Sun Company but has legal access to Rising Sun's nonpublic financial records. Based on the information, Dennis buys and later sells Rising Sun stock for personal gain.If the Securities and Exchange Commission takes Dennis to court for insider trading, it will most likely be on the basis of

Group of answer choices

short-swing profits.

blue-sky theory.

misappropriation theory.

tipper/tippee theory.

Q6: As presented in class in the movie clip fromInside Job, leading up to the financial crisis of 2008 investment banks bundled risky home loans into securities called _________ that were then sold to investors.

Group of answer choices

subprime mortgages

credit default swaps

collateralized debt obligations

adjustable rate mortgages

Q7: Bill and Ted do business as partners in Laugh Riot. For federal income tax purposes, Laugh Riot would be treated as

Group of answer choices

a pass-through entity.

a partnership by estoppel.

a tax-paying entity.

a natural person.

Q8: Local Bank offers a home loan to Marty despite Marty's bad credit rating and low income.Local Bank then sells this loan to a large mortgage company who bundles Marty's high-risk mortgage together with other low-risk mortgages and sells that bundle to another mortgage company.Local Bank's action in Marty's mortgage is best described as

Group of answer choices

a conflict of interest

fraud

insider trading

a moral hazard

Q9: The Franchise Rule requires a franchisor to provide potential earnings figures to its prospective franchisees.

Group of answer choices

True

False

Q10: Which of the following cannot be a "bona fide occupational qualification"?

Group of answer choices

national origin

gender

religion

race