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ETH/321T: Ethical And Legal Topics In Business
Wk 2 – Apply Assignment
- Noodleoo, a struggling restaurant chain, wants to enact a franchise agreement with Stephen to sell its product through a chain-style franchise. Stephen agrees and opens the store, and 6 months later Noodleoo goes bankrupt. Which is most likely true of this situation?
| If Noodleoo was not transparent with its financial data, it has broken the Franchise Rule.The Franchise rule does not apply to struggling companies.If Noodleoo was not transparent with its financial data, Stephen has no recourse.Stephen was not responsible for looking into the financial status of Noodleoo before making the agreement. |
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5 / 5 (100.0%)
- Zoey is the CEO of a corporation she organized herself, and the corporation has 15 shareholders. The company operates in several states, as well as outside of the U.S. Her business consists mostly of training services for in-home medical care personnel. Her company would be a __________ corporation.
| Closely-heldSubchapter SProfessional |
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5 / 5 (100.0%)
- Koffman Corporation is trying to raise capital. What method would be the least risky to raise capital if it has a less-than-favorable credit rating?
| Bond issuance, since nobody wants to buy shares of a company with a less-than-perfect credit rating.With low credit, Koffman doesn’t have any options for raising capital.Bond issuance, since additional debt can provide the company with more leverage.Stock issuance, since a credit rating won’t negatively affect Koffman’s ability to sell stock. |
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5 / 5 (100.0%)
- Sandy works for RigorMart. She supervises regional managers and directs them based on orders from the board of directors. Sandy’s position also entitles her to stock ownership in the company. What is Sandy’s position in the company?
| ShareholderExecutiveExecutive and shareholderExecutive, shareholder, and director |
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5 / 5 (100.0%)
- Lily wants to build a business. She has very little capital. She does, however, have a partner with which she could run a business. Lily wants to be able to avoid being held personally liable for any problems the business has. Which of the following would lead Lily to choose a sole proprietorship organization for her business?
| Possession of a partnerNone of the aboveLittle capitalAvoidance of personal liability |
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5 / 5 (100.0%)
- Loptech, a technology firm, wants to issue bonds for investment purposes. Loptech has one of the best credit ratings in the industry. Market rates for debt instruments average at .5% interest. Based on its credit rating, Loptech would likely sell bonds that pay _____.
| Indeterminable with current information0.75%0.5%0.25% |
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0 / 5 (0.0%)
As the text states, firms with higher credit may issue lower-rate bonds. Loptech’s spectacular credit would most likely give it the ability to issue bonds that pay less than the market average.
- Tucker works for a retail distribution company that was recently started. Tucker has invested a lot of his earnings into shares of the company. When quarterly earnings are posted, Tucker receives a check for 8% of the quarterly profit of the company. Tucker belongs to a __________ corporation.
| Subchapter SClosely-heldProfessional |
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5 / 5 (100.0%)
- What is the appropriate description for a distributorship?
| A franchisee makes or sells a franchisor’s product.A franchisee produces and sells a franchisor’s product using the franchisor’s name.A franchisee sells a franchisor’s product in a specific geographic area. |
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5 / 5 (100.0%)
- Lenny organized his business in Delaware. He has customers in Delaware, other states in the U.S., and in foreign countries. Lenny’s business is __________ in Delaware.
| AlienClosely-heldDomesticSubchapter SProfessional |
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5 / 5 (100.0%)
- Mario and Johnny want to start a business. They have very little capital. They are new partners and largely unfamiliar with each other’s management practices. They are happy, however, to be organizing a business together in order to avoid full liability for the business. Which detail of this situation is a good reason for Mario and Johnny to create a general partnership?
| Unfamiliar with each other’s management practicesSharing profitsAvoiding full liabilityLittle capital |
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5 / 5 (100.0%)
- Rita wants to be involved in business. She has a fair amount of money to invest, but she does not want to be involved in management. She wants to form a business in the quickest way possible under her circumstances. Which form of business would be best for Rita?
| Limited partnershipSole proprietorshipLLCCorporation |
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- What is the correct order of events for the formation of a corporation?
| Business selects a state of incorporation; Incorporators select a name for the corporation; Articles of incorporation are filed; Novations are executedBusiness selects a state of incorporation; Novations are executed; Incorporators select a name for the corporation; Articles of incorporation are filedNovations are executed; Articles of incorporation are filed; Incorporators select a name for the corporation; Business selects a state of incorporationIncorporators select a name for the corporation; Articles of incorporation are filed; Business selects a state of incorporation; Novations are executed |
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5 / 5 (100.0%)
- Piper is a manager in a corporation that was organized in Canada by one of his former coworkers. The company provides consulting services and training for architects employed by construction companies. The company recently went public, with shares being sold to hundreds of investors. Piper’s company would be a __________ corporation.
| Subchapter SProfessionalClosely-held |
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5 / 5 (100.0%)
- J-Chron’s board of directors periodically meets with the CFO of the company. The CFO reports on the financial status of a company project. The board asks whether the project is compliant with legally-required accounting principles, but asks no other questions about the project, such as how the project supports the company’s mission and strategy. Which of the following is true?
| The board is not meeting its duty of care to shareholders.The board is meeting legal requirements but not its duty of care to shareholders.The board is fully meeting its duty of care to shareholders.The board is not legally required to meet any duty of care requirements. |
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5 / 5 (100.0%)
- Hal and Miranda have a general partnership business for landscaping projects. Hal makes a contract with a customer for a project one day while Miranda is absent and leaves on vacation the next day. Miranda does not feel she has the time to perform the contract for the customer. Which of the following is true?
| Miranda is obligated to perform the contract.Miranda may relinquish her obligation to perform the contract since Hal signed it without her knowledge.Only Hal is obligated to perform the contract. |
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5 / 5 (100.0%)
- What is the appropriate description for a chain-style franchise?
| A franchisee sells a franchisor’s product in a specific geographic area.A franchisee makes or sells a franchisor’s product under their own business name or organization.A franchisee produces and sells a franchisor’s product using the franchisor’s name. |
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5 / 5 (100.0%)
- Abigail is a manager at her company. The company just launched an initiative to improve its corporate citizenship practices. Abigail is responsible for all but which of the following areas?
| Vigilance of the board of directorsSafeguarding shareholders’ interestsIntegrity and ethical behaviorDisclosure and transparency |
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5 / 5 (100.0%)
- What role best fits the following situation?
Manny wants to be involved in a business but is not sure which type of business to join or create. He has capital to invest. He has a good network of potential investors and partners. He has no experience in management.
| Limited partner in a limited partnership.Neither a limited or general partner would be a good choice.General partner in a limited partnership. |
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5 / 5 (100.0%)
- Which of the following roles best fits the situation?
Apol wants to start or join a business but is not sure which business organization would be best. She has a large amount of capital but does not yet have any partners who can invest in or effectively manage the business.
| Limited partner in a limited partnership.Neither a limited or general partner would be a good choice.General partner in a limited partnership. |
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5 / 5 (100.0%)
- Which of the following roles best fits the situation?
Kevin wants to create a business but is not sure what role is best for him. He has capital to invest. He has several partners with which he can begin a business. He has the most management experience of all his potential partners.
| Neither a limited or general partner would be a good choice.Limited partner in a limited partnership.General partner in a limited partnership. |
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5 / 5 (100.0%)
- What is the appropriate description for a plant-processing franchise?
| A franchisee focuses on making a franchisor’s product using the franchisor’s manufacturing method or recipe.A franchisee produces and sells a franchisor’s product using the franchisor’s name.A franchisee sells a franchisor’s product in a specific geographic area. |
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5 / 5 (100.0%)
- Juan wants to be involved in business. He has plenty of capital to invest, but he does not want to be involved in management. He also does not want to worry about fluctuations in the market prices of debt and equity instruments. Which form of business would be best for Juan?
| LLCCorporationSole proprietorshipGeneral partnership |
FEEDBACK
5 / 5 (100.0%)