BUSA 310 Exam 3 Study Guide Lectures 7 9 EXAM 3 STUDY QUESTIONS 1 T F If a store advertises a product it must have enough stock on hand to fill every order 2 T F The FTC has established a national do not call registry 3 T F Under usury laws lenders are limited in amount of interest they may charge 4 T F Under the Trust in Lending Act it does not matter how the information is disclosed so long as it is disclosed someplace on the first page of the document F A consumer reporting agency has the right to keep information in its files secret loan 5 T 6 Which of the following statements is false a Mail order companies must ship a product within the time stated b If no time is stated the mail order company must ship within 30 days c If a company cannot ship a product when promised the company must cancel the order unless the customer indicates he wants the item d If a company cannot ship the product within 30 days of the original shipping date the company must cancel the order unless the customer indicates he still wants the item e Each time the shipping date changes the company must notify the customer 7 If you receive a product in the mail that you did not order a You must pay for it or return it b You must pay for it only if you use it c You must throw it away d It is a gift to you e You must return it but the company must reimburse you for postage 8 Zach sells Cutco Knives door to door Which of the following statements is false a The buyer has three days to cancel the order b Zach must tell the buyer of her rights c Zach must give the buyer a written notice of her rights d The seller can cancel orally or in writing e If the seller cancels Zach must return her money within 10 days 9 Depending on state law if a lender violates the usury laws the borrower could possibly be allowed to keep I The interest that exceeds the usury limit II All the interest III All of the loan and the interest a I II and III b Only I c Only II d Only III e Neither I II nor III 10 Jodie is upset because her credit card bill shows a charge of 39 to a pornographic website that she never visited Under the FCBA a She should call the credit card company to tell them that this charge is wrong b She should call her parents to let them handle the problem c The credit card company has 90 days to acknowledge her complaint d The credit card company has the right to close our her account until the dispute is resolved e The credit card company must investigate a complaint and respond within 90 days 11 T F Before permitting a company to issue new securities the SEC investigates to ensure that the company has a promising future 12 T F Small offerings of securities do not need to be registered with the SEC 13 T F Horizontal price fixing is legal as long as it does not have an anticompetitive impact 14 T F Only the federal government regulates securities offerings the state does not 15 T F It is legal for a company to sell its product at a price below cost so long as it does not intend to drive competitors out of business 16 Under Regulation D an issuer a May not sell to 1 000 accredited investors b May not sell to 27 unaccredited investors c Must make disclosure to accredited investors d Must make disclosure to unaccredited investors e May advertise the stock publicly 17 Which of the following statements is not true about a public offering a The issuer files a registration statement with the SEC b The issuer files a prospectus with the SEC c Company officers may make public statements about the offering before the stock is sold e The issuer may solicit offers for the stock before the effective date 18 To have an illegal monopoly a company must I Control the market II Maintain its control improperly III Have a market share greater than 50 percent a I II and III b I and II c II and III d I and III e Neither I II nor III 19 Lloyd sold car floor mats to Mercedes dealerships Then Mercedes began to include floor mats as standard equipment Mercedes has a 10 percent share of the luxury car market a Mercedes has created an illegal tying arrangement because floor mats and cars are separate products b Mercedes has not created an illegal tying arrangement because it does not have significant power in the luxury car market c Mercedes has not created an illegal tying arrangement because it is not tying the two products together d Mercedes has created an illegal tying arrangement because it controls the market in floor mats for its cars 20 Mike is director of sales for his company He negotiates prices with Paige and Lauren who work for two of his biggest customers Paige tells him she can buy the same product cheaper elsewhere He cuts the price for her but not for his other customers At the same time he develops a crush on Lauren so offer to sell her the product at a lower price In subsequent months these two customers come to dominate the market Which statement is correct a Mike can charge whatever price he wants to any customer b Mike must charge all his customers the same price c d e The price cut to Paige but not Lauren is legal The price cut to Lauren but not Paige is legal Mike is not required to charge all his customers the same price but neither of these price cuts is legal 21 T F Sole proprietorships must file a tax return 22 T F Ownership in a partnership is not transferrable 23 T F Creditors of a partnership must first seek recovery from partnership assets before going after the personal assets of a partner 24 T F In both a limited partnership and a limited liability partnership the partners are not personally liable for the debts of the partnership 25 T F Venture capitalists often require companies they own to become LLCs before going public 26 CPA QUESTION Assuming all other requirements are met a corporation may elect to be treated as an S corporation under the Internal Revenue Code if it has a Both common and preferred stockholder b A partnership as a stockholder c 100 or fewer stockholders d The consent of a majority of the stockholders 27 A limited liability partnership a Has ownership interests that cannot be transferred b Protects the partners from liability for the debts of the partnership c Must pay taxes on its income d Permits a limited number of partners 28 A limited liability company a Is regulated by a well established body of law b Pays …