Q&A Hero

Q: Readmore Bookstore Corporation files a registration statement with the Securities and Exchange Commission and provides a prospectus describing the securities to investors. These items are intended to provide sufficient information so that the financial risks involved can be evaluated by a. market professionals to explain to all investors. b. government regulators to disclose to the general public. c. sophisticated investors only. d. unsophisticated investors.

Q: Under an exclusive-dealing contract, a seller promises a buyer a certain territory in which the buyer will have no direct competition.

Q: Parties who have contractual capacity may form an enforceable contract.

Q: RingTone Corporation is a public company whose securities are traded among investors. Under the Securities Act of 1933, a security is a. almost any stake in the ownership or debt of a company. b. an investment that is guaranteed to make a profit. c. only such common forms of debt and equity as bonds and stocks. d. whatever a company represents to the public as a security.

Q: A contract is formed when two parties promise to perform an act in the future.

Q: A firm that is attempting to meet the competition's price may have a defense to liability for price discrimination.

Q: A promise is an assurance that one will or will not do something in the future.

Q: Frothy Beverage Corporation is a public company whose shares are traded in the public securities markets. Under the Securities Act of 1933, Frothy is required to a. contribute to the operations of national stock exchanges. b. disclose financial and other information about its securities. c. engage in market surveillance to deter undesirable practices. d. solicit proxies for voting.

Q: Cotton Products Corporation is a public company whose shares are traded in the public securities markets. The Securities Act of 1933 requires Cotton to disclose financial and other significant information concerning its securities in order to a. increase corporate accountability by imposing responsibility on chief corporate executives. b. prevent insiders from trading among themselves. c. protect investors. d. provide a "safe harbor" for companies that make forward-looking statements.

Q: Charging different prices to different buyers for identical goods is price discrimination.

Q: To violate antitrust law, an attempt to monopolize a market must be intended to exclude competition and garner monopoly power.

Q: Parties can form a contract without putting the terms in writing.

Q: A major problem facing the Securities and Exchange Commission is how to enforce the antifraud provisions of the securities laws in the online environment.

Q: A joint refusal to deal with a particular person or firm is always a vio­lation of antitrust law.

Q: An express contract must be in writing.

Q: Offers may not be revoked before they are accepted.

Q: Corporation' chief executive officers are directly accountable for the accuracy of financial statements filed with the Securities and Exchange Commission.

Q: Willful violations of the Sarbanes-Oxley Act of 2002 may be subject to harsh penalties.

Q: A unilateral refusal to deal with a specific party is never a vio­lation of antitrust law.

Q: A unilateral contract is formed when the one receiving the offer completes the requested act or performance.

Q: Corporate governance can be defined as the relationship between a corporation and its directors.

Q: The possession of monopoly power constitutes the offense of monopolization.

Q: Generally, federal se­curities law are patterned after state' antifraud laws.

Q: A contract can be created only when an offer is accepted by the offeree's performance.

Q: Acquiring monopoly power through anticompetitive means violates antitrust law.

Q: "Blue sky laws" regulate securities data stored in cloud computing servers.

Q: A firm can have monopoly power without violat­ing antitrust law.

Q: An offeree is a person who makes an offer.

Q: State securities laws apply mainly to intrastate transactions.

Q: An agreement includes an offer and an acceptance.

Q: Monopoly power may be proved by evidence that a firm used its power to control prices.

Q: Private parties cannot sue violators of Section 10(b) and Rule 10b-5.

Q: Size alone determines whether a firm is a mo­nopoly.

Q: Under the objective theory of contracts, the intention to enter into a contract is judged by outward, objective facts as interpreted by a reasonable person.

Q: A contract is an agreement that can be enforced in court.

Q: Violations of the Securities Exchange Act of 1934 may be subject to criminal prosecution, but not civil liability.

Q: The common law governs all contracts without exception.

Q: Maximum resale price maintenance agreements are subject to analysis under the rule of reason.

Q: Minimum resale price maintenance agreements are subject to analysis under the rule of reason.

Q: "Forward-looking" financial forecasts are prohibited under SEC Rule 10b-5.

Q: A corporation can recapture any profits realized by an insider on any purchase or sale of the firm's stock within any six-month period.

Q: All promises are legal contracts.

Q: An agreement between firms operating at different levels in the manu­facturing and distribution process cannot violate antitrust law.

Q: Only outsiders who would ordinarily be deemed fiduciaries of the corporations in whose stock they trade can be liable for insider trading.

Q: On May 1, Local Cartage Company and Modern Computers, Inc., orally agree that Local Cartage will pick up from National Chip Corporation and deliver to Modern Computers' manufacturing plant a certain number of computer chips on each Monday in the month. Under the agreement, Modern Computers will pay for the delivery services on June 1. On May 1, is this contract express, implied in fact, or implied in law? On May 31, after all of the deliveries have been made, is the contract executed or executory?

Q: A group boycott against a supplier for political reasons can be legal.

Q: Buying or selling securities on the basis of nonpublic information is illegal only if the profit from the transaction is unreasonable.

Q: Ed, a businessperson, is a friend of Fran, the owner of a candy store. Every day, Ed spends five minutes in Fran's candy store, looking at the candy and usually buying one or two candy bars. One afternoon, Ed goes into the store, looks at the candy, and picks up a $1 candy bar. Ed waves the candy at Fran without saying a word and walks out. Is there a contract? If so, how would it be classified in terms of formation, performance, and enforceability?

Q: A trade association practice or agreement that restrains trade is analyzed under the rule of reasons.

Q: Standard Insurer, Inc., insures Techno Corporation's assets under a policy that states any "amendment" must be approved by Standard and signed by Techno's president. In renewing the policy, Standard insists on an "amendment" excluding coverage for terrorist acts. A Techno employee signs the amendment. Based on the court's reasoning in Case 10.3, Citizens Communications Co. v. Trustmark Insurance, if a terrorist act occurs a. Standard must pay Techno because the amendment does not meet the policy's conditions. b. Standard must pay Techno because the policy predates the amendment. c. Techno must suffer the loss because the amendment meets the policy's conditions. d. Techno must suffer the loss because the policy predates the amendment.

Q: The key to liability under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 is whether undisclosed inside information is material.

Q: A market division by class of customer between rival firms viola­tes antitrust law.

Q: A price-fixing agreement has the potential to lessen competition.

Q: Nora enters into a contract with Owen's Transport Company for the delivery of a shipment of fresh produce. If ambiguities appear in the contract, they will be construed against a. the party who drafted the contract. b. the party with the greater bargaining power. c. the promisor. d. the promisee.

Q: SEC Rule 10b-5 applies to almost all cases involving the trading of securities.

Q: Eve and Frank enter an express contract for the construction of an office building. Express contract terms are given a. less priority than the parties' prior dealing. b. less priority than the trade usage in that particular industry. c. less priority than the parties' course of performance. d. more priority than the prior dealing, course of performance, and trade usage.

Q: A price-fixing agreement that is reasonable does not violate antitrust law.

Q: Section 10(b) of the Securities Exchange Act of 1934 covers only corpo­rate officers and di­rectors.

Q: Phil enters into a contract with Quality Resorts, Inc., to work as a chef. Under the plain meaning rule, the meaning of this contract must be determined by reference to a. any available evidence. b. any relevant extrinsic evidence. c. the face of the instrument. d. the later testimony of the parties.

Q: An act must have a substantial impact on interstate commerce to violate antitrust law.

Q: SEC Rule 10b-5 prohibits the commission of fraud in connection with the purchase or sale of any security.

Q: A firm can have market power without violat­ing antitrust law.

Q: Pete, a judge, can apply the doctrine of quasi contract to a dispute between Quality Service Company and Regulated Office Systems a. only if there is a valid contract covering the area in question. b. only if there is not a valid contract covering the area in question. c. whether or not there is a valid contract covering the area in question. d. under no circumstances.

Q: The Securities Exchange Act of 1934 provides for continuous, periodic disclosures by publicly held corporations.

Q: Monopoly power is an extreme amount of market power.

Q: Alex, a physician, renders aid to Burt, who is injured and unconscious. Alex can recover the cost of the aid from Burt a. even if Burt was not aware of the aid. b. only if Burt recovers because of the aid. c. only if Burt was aware of the aid. d. under no circumstances.

Q: Any corporation with less than $10 million in assets and fewer than five hundred shareholders must register their securities with the Securi­ties and Exchange Commission.

Q: Federal Oil Company and Great Apartments, Inc., sign a contract in which Federal agrees to deliver heating oil in exchange for Great's promise to pay for it. Federal delivers the oil. The contract is a. executory on the part of Federal. b. executory on the part of Great. c. fully executed. d. neither executed nor executory on the part of either party.

Q: Private parties can sue violators of the Securities Act of 1933.

Q: A market in which there is more than one seller, even if only a limited number, cannot be a monopoly.

Q: Ann promises to buy a house from Ben, who promises to vacate the property on July 1. If these promises are in writing, they are most likely a. enforceable. b. unenforceable. c. void. d. voidable.

Q: Against a charge of a violation of the Securities Act of 1933, only an issuer of stock can assert the due diligence defense.

Q: To violate antitrust law, an activity must involve two or more persons.

Q: Sam and Tiffany enter into an implied-in-fact contract. The parties' conduct a. defines the contract's terms. b. finds the contract's facts. c. terminates any unintended consequences. d. undercuts any terms based on the facts.

Q: Willful violations of the Securities Act of 1933 may be subject to civil liability, but not criminal prosecution.

Q: Securities that are exempt from the registration requirement can generally be sold and resold without being registered.

Q: The basic purpose of antitrust law is to regulate economic competition.

Q: Jolly Sales Company and Kwik Distributors, Inc., enter into an agreement that contains some express terms and some that are implied. This is a. a mixture of an express contract and an implied-in-fact contract. b. an express contract only. c. an implied-in-law contract. d. not a contract.

Q: Alpha Design Company and Beta Products, Inc., sign a document that states Alpha agrees to design a Web page for Beta and Beta agrees to pay Alpha for this service. Alpha and Beta have made a. an express contract. b. an implied-in-fact contract. c. an implied-in-law contract. d. a quasi contract.

Q: Few securities can be resold without registration.