Answer these following Questions:
Question: 1 Which of the following aspects of the relationship between Enron's special purpose entities (SPE's) and Enron itself is not particularly egregious?
- A) Enron had no reason for forming SRE's other than to create a deceptive impression that it was in better financial shape that it actually was.
- B) Hedging risks by entering into agreements with oneself does not lower risks.
- C) Underwriting one's own risks is not underwriting them at all.
- D) Using Enron's own stock to finance the SPE's provided a very strong incentive for Enron management to keep its stock value high.
- E) All of the above.
- F) None of the above.
Question: 2 Which statement is not true of the agency concept?
- A) In actual fact, not all agents are employees.
- B) Under the common law tradition of the United States, all employees are treated as agents of employers.
- C) The primary responsibilities in the employer-agent relationship lie with the employer.
- D) The law has described the employee-employer connection as a master-servant relationship.
Question: 3 Select the statement that does not support the narrow view of non-managerial employees' responsibilities to their employer, the idea that the employer exercises a great deal of control over the nature and terms of employment with very little discretion given to the employee:
- A) Employees consent to obeying managers when they take a job.
- B) Employees who agree to obey employers are not truly abandoning their own responsibility.
- C) The choice of obeying someone's command or jeopardizing one's job is a fundamentally coercive situation and, therefore, the consent involved is not fully free.
- D) Owners have property rights and have to be protected against the harms they might suffer from employees.
Question: 4 Identify the statement that does not ly present the fiduciary relationship that is said to exist between managerial employees and employers:
- A) Managers have special expertise that owners must rely on, so they are given wider responsibilities .
- B) Managers are free from close day-to-day oversight by owners.
- C) Because managers have greater freedom from day-to-day supervision by owners, they are not generally understood to have a strong fiduciary duty to always act in the best financial interest of the owners.
- D) The legal duties of loyalty, trust, obedience and confidentiality are understood to override the manager's personal interests.
Question: 5 Identify the statements that reflect the varied owner interests corporate managers are supposed to serve:
- A) Investors buy stock because they believe in the company and its products.
- B) Investors are playing the stock for short-term gain.
- C) Investors see their stock ownership as an investment in a company and its technology.
- D) Investors see their stock ownership as a long-term investment for personal retirement and security.
- E) All of the above.
- F) None of the above.
Question: 6 Which statement describes a managerial action that does not unethically impose costs upon stockholders and other stakeholders?
- A) The action imposes unwanted costs on stockholders and stakeholder by giving up some alternatives in favor of others in the interest of maintaining the fiscal stability of the enterprise.
- B) A personal interest of a manager hinders the exercise of his or her professional judgment.
- C) A portion of some payment is kicked back to the payer as an incentive to make the payment in the first place.
- D) Financial advisers receive payments from a brokerage house to pay for research and legal services that should be used to benefit the advisers' clients, not the advisers' personal interests.
Question: 7 Select the statement that, ethically speaking, best represents a valid concept of what loyalty to a firm means:
- A) Loyalty means a willingness to sacrifice one's own interest by going above and beyond ordinary employee responsibilities.
- B) Loyal employees are expected to sacrifice for the firm even though the firm is not necessarily bound to sacrifice for the employee.
- C) Since the model of agency law lays a legal duty of loyalty on employees, employees clearly have a corresponding ethical responsibility to be loyal.
- D) While a willingness to sacrifice might be a part of loyalty, it would seem that devotion and faithfulness to a common good is both more essential to loyalty and what explains the willingness to sacrifice.
Question: 8 Identify the statement that challenges Albert Carr's analogy that, like poker, business is a game that has its own rules and, therefore, is exempt from ordinary requirements of morality:
- A) Carr overestimates the prevalence and acceptability of dishonesty within business.
- B) Even if business did have its own set of ethical conventions, that fact alone does not exempt it from ordinary ethical evaluations.
- C) There are major disanalogies between business and games like poker that weaken the conclusions drawn from Carr's analogy.
- D) Unlike poker games, individual often have no choice but to participate in business practices.
- E) All of the above.
- F) None of the above.
Question: 9 According to Richard DeGeorge, which statement presents a condition that makes blowing the whistle on a company not just permissible but obligatory?
- A) A threat of serious harm exists.
- B) The whistleblower has exhausted all internal channels for resolving the problem.
- C) The harm to be prevented overrides the harm done to the firm and to other employees.
- D) The whistleblower has good reason to believe that blowing the whistle will prevent the harm.
Question: 10 Select the statement that is not a criticism of insider trading:
- A) The insider benefits inappropriately by buying or selling the stock at a price below or above what the market will demand when the inside information is made public.
- B) An insider can benefit by trading on bad news as well as good, and this might be an incentive to work against the firm's best interests.
- C) The insider's action sends the message to the market, reflecting the stock's true value, moving the market toward equilibrium.
- D) The insider's information is often used without the firm's permission in a way that harms the stockholder's interests.