Question: Which of the following is true with respect to credit counseling?
Answer Options:
It is optional.
It applies only if the debtor is required to file a Chapter 13 bankruptcy.
It is required only if ordered by the U.S. Trustee.
It is a prerequisite to file for a Chapter 7 bankruptcy.
Answer: It is a prerequisite to file for a Chapter 7 bankruptcy.
Question: At a fancy smancy party you are asked to explain the purpose of a grand jury. Your response is which of the following?
Answer Options:
To determine whether there is probable cause to bring a defendant to trial.
To determine whether the defendant is guilty beyond a reasonable doubt.
To determine whether a search of the defendant’s property is allowed.
To allow the defendant an opportunity to prove that probable cause for his or her arrest does not exist.
Answer: To determine whether there is probable cause to bring a defendant to trial.
Question: 8. We can identify the cash costs and cash inflows to a company that will result from a project. These could be called “direct inflows and outflows,” and the net difference is the direct net cash flow. If there are other costs and benefits that do not flow from or to the firm, but to other parties, these are called externalities, and they need not be considered as a part of the capital budgeting analysis.
True
False
Answer: b. False
Question: Victor E. Lapp dies with no probate estate. There is, however, a revocable trust he created 10 years prior to his death. Which of the following is true?
Answer Options:
Victor’s creditors will be able to collect against the trust assets.
The trust assets should be treated as probate property.
Victor’s creditors will not be able to collect against the trust assets.
None of the alternatives are correct.
Answer: Victor’s creditors will be able to collect against the trust assets.
Question: One of your friends asks you to explain the difference between a license and an easement in gross. Your response is …
A license is the right to enter property for a particular purpose – an easement in gross is the right to enter property to extract something from the property.
A license is the right to enter property for a particular purpose – an easement in gross is the right to enter property in order to have access to a road.
An easement in gross is the right to enter property for a particular purpose – a license is the right to enter property to extract something from the property.
There is no difference.
Answer: A license is the right to enter property for a particular purpose – an easement in gross is the right to enter property in order to have access to a road.
Question: The consequence of declining insurance coverage on a rental car is which of the following?
Increased liability in the event of an accident.
The rental company cannot charge for any damages regardless of fault.
The renter assumes financial responsibility for damages up to the amount covered by the insurance.
The rental company provides minimal coverage by default.
Answer: The renter assumes financial responsibility for damages up to the amount covered by the insurance.
Question: Which of the following is true with respect to the automatic stay?
Answer Options:
It only applies to protect the debtor from the debts listed on his or her bankruptcy petition.
It prevents the debtor’s creditor from pursuing collection action against the debtor when the debtor files for bankruptcy.
It only applies if the trustee petitions for it to apply.
It is imposed after the 341 meeting.
Answer: It prevents the debtor’s creditor from pursuing collection action against the debtor when the debtor files for bankruptcy.
Question: At a flea market, Clark purchases a comic book from Bruce for $10. Later, Clark re-sells the comic for $50,000. Bruce decides to sue Clark to rescind the contract based on lack of consideration. Which of the following is true?
Although the contract would not be rescinded, Clark must share the profits with Bruce.
The contract will be rescinded for some other reason.
The contract will be rescinded based on lack of consideration.
Based on freedom of contract, Bruce loses.
Answer: Based on freedom of contract, Bruce loses.
Question: Asher and a car dealer haggle over the price of a new car Asher would like to purchase. The car dealer’s final offer is $30,000. Asher states that he will think about it as he walks around the showroom. As he is walking around, he notices the car dealer speaking to another person and the other person is shaking hands. When the car dealer leaves the showroom, the other person tells Asher that she purchased the car $35,000. If Asher sues the car dealer for breach of contract, what is the likely outcome?
Answer Options:
Asher will lose because the car dealer essentially withdrew Asher’s offer.
Asher will win because the car dealer sold the car for more than he had offered to sell it to Asher.
Asher will lose because there was a mistake of fact.
Asher will win because when the car dealer sold the car, the offer to Asher was still open.
Answer: Asher will lose because the car dealer essentially withdrew Asher’s offer.
Question: Which of the following is unique regarding the principal agency relationship?
Answer Options:
Fiduciary relationship.
Freedom of contract.
Must be in writing.
Unconscionable.
Answer: Fiduciary relationship.
Question: Once a court renders a decision in which it applied a principle to a certain set of facts, which of the following is true?
Answer Options:
The decision becomes law that all other courts must follow.
The decision sets a precedent that other courts may follow.
The decision applies retroactively to all similar cases.
The decision only applies to the specific parties involved in the case.
Answer: The decision sets a precedent that other courts may follow.
Question: A 15-year bond with a face value of $1,000 currently sells for $850. Which of the following statements is CORRECT?
a. The bond’s coupon rate exceeds its current yield.
b. The bond’s current yield exceeds its yield to maturity.
c. The bond’s yield to maturity is greater than its coupon rate.
d. The bond’s current yield is equal to its coupon rate.
e. If the yield to maturity stays constant until the bond matures, the bond’s price will remain at $850.
Answer Options:
a. False
b. False
c. True
d. False
e. False
Answer: c. True
Question: Despite the good advice you proffer, Miranda Wrights and Goldie Locke form a partnership without executing a partnership agreement. When it comes time to distribute the profits, the parties disagree as to their relative shares. The likely outcome is
If litigated, the court will order the partnership to dissolve.
If litigated, the court will require them to add another partner to break the stalemate.
If litigated, the court will follow the applicable provisions in the Uniform Partnership Act.
Unless the parties negotiate, there will be stalemate.
Answer: If litigated, the court will follow the applicable provisions in the Uniform Partnership Act.
Question: Mollie Cule sues Miranda Wrights for negligently crashing into her automobile in Florida and wins. The court awards Mollie a judgment for damages. Before she is able to collect the judgment, Miranda moves to Arkansas. Mollie seeks to enforce the judgment against Miranda in Arkansas. The likely outcome is which of the following?
The Arkansas court has the authority to force Miranda to return to Florida.
Mollie should be able to enforce the Florida judgment in Arkansas pursuant to the full faith and credit clause of the U.S. Constitution.
The Arkansas court only has the discretion to enforce or not enforce the judgment for any reason.
The Florida judgment cannot be enforced in Arkansas.
Answer: Mollie should be able to enforce the Florida judgment in Arkansas pursuant to the full faith and credit clause of the U.S. Constitution.
Question: The President of the United States negotiates a treaty with another country. The treaty is then sent to Congress for a vote of approval or disapproval. This is an example of which of the following?
Checks and balances between branches of government
An unconstitutional action
A veto
None of the alternatives are correct
Answer: Checks and balances between branches of government
Question: When adding a randomly chosen new stock to an existing portfolio, the higher (or more positive) the degree of correlation between the new stock and stocks already in the portfolio, the less the additional stock will reduce the portfolio’s risk.
a. True
b. False
Answer:
Question: A Treasury bond has an 8% annual coupon and a 7.5% yield to maturity. Which of the following statements is CORRECT?
a. The bond sells at a price below par.
b. The bond has a current yield greater than 8%.
c. The bond sells at a discount.
d. The bond’s required rate of return is less than 7.5%.
e. If the yield to maturity remains constant, the price of the bond will decline over time.
Answer Options:
a. False
b. False
c. False
d. False
e. True
Answer: e. True
Question: The difference between actual authority and implied authority of an agent is which of the following?
Actual authority is articulated by the principal to the agent whereas implied authority is authority necessary to carry out the principal’s purpose.
Actual authority is authority necessary to carry out the purpose of the principal whereas actual authority is authority articulated to the agent.
There is no implied authority in agency law.
They are exactly the same.
Answer: Actual authority is articulated by the principal to the agent whereas implied authority is authority necessary to carry out the principal’s purpose.
Question: At a fancy smancy party, one of the party goers tells Mackensie that the party goer’s sister is filing bankruptcy and that 2 days after files the bank plans to start a foreclosure action. Mackenzie’s response is?
Answer Options:
Because there is a foreclosure action, the bankruptcy will have no effect on the outcome.
The automatic stay will prevent the foreclosure action from moving forward.
The trustee will decide whether or not the foreclosure action will go forward.
Answer: The automatic stay will prevent the foreclosure action from moving forward.
Question: State trial courts that are called special trial courts are most likely to have.
Answer Options:
Appellate jurisdiction.
General jurisdiction.
Original jurisdiction for certain types of cases.
No jurisdiction.
Answer: Original jurisdiction for certain types of cases.
Question: Suppose a firm relies exclusively on the payback method when making capital budgeting decisions, and it sets a 4-year payback regardless of economic conditions. Other things held constant, which of the following statements is most likely to be true?
Answer Options:
a. It will accept too many short-term projects and reject too many long-term projects (as judged by the NPV).
b. It will accept too many long-term projects and reject too many short-term projects (as judged by the NPV).
c. The firm will accept too many projects in all economic states because a 4-year payback is too low.
d. The firm will accept too few projects in all economic states because a 4-year payback is too high.
e. If the 4-year payback results in accepting just the right set of projects under average economic conditions, then this payback will result in too few long-term projects when the economy is weak.
Answer: a
Question: Which of the following statements is CORRECT?
Answer Options:
a. If a project has “normal” cash flows, then its IRR must be positive.
b. If a project has “normal” cash flows, then its MIRR must be positive.
c. If a project has “normal” cash flows, then it will have exactly two real IRRs.
d. The definition of “normal” cash flows is that the cash flow stream has one or more negative cash flows followed by a stream of positive cash flows and then one negative cash flow at the end of the project’s life.
e. If a project has “normal” cash flows, then it can have only one real IRR, whereas a project with “nonnormal” cash flows might have more than one real IRR.
Answer: e
Question: A 10-year Treasury bond has an 8% coupon, and an 8-year Treasury bond has a 10% coupon. Neither is callable, and both have the same yield to maturity. If the yield to maturity of both bonds increases by the same amount, which of the following statements would be CORRECT?
a. The prices of both bonds will decrease by the same amount.
b. Both bonds would decline in price, but the 10-year bond would have the greater percentage decline in price.
c. Both bonds would decline in price, but the 8-year bond would have the greater percentage decline in price.
d. A market yield increase is the same as a yield to maturity increase.
e. The prices of both bonds would increase by the same amount.
Answer Options:
a. False
b. True
c. False
d. False
e. False
Answer: b. True
Question: When are an individual’s “Miranda Rights” relevant?
Answer Options:
Whether his or her property can be searched for evidence.
When the authorities intend to ask the defendant questions.
In determining whether the defendant has the right to a grand jury.
Answer: When the authorities intend to ask the defendant questions.