5 Written questions
5 Matching questions
- 7. (from class) John Deere Corporation, which makes and sells large farm equipment, sells a $500,000 piece of farm equipment on credit to Farmer John, a farmer. Farmer John signs a credit agreement in which he agrees to pay John Deere $100,000 plus 10% interest on the outstanding balance each July 1 for the next five years. The farm equipment is made collateral for the secured loan. John Deere files a financing statement in the state's recording office to perfect its security interest in the farm equipment. This is covered by _________________ of the Uniform Commercial Code (UCC).
A. Article 2
B. Article 2A
C. Article 3
D. Article 7
E. Article 9
- 21. Ally, Lin, Won-Suk, and Jen form a new California limited liability company (LLC) called "MatchmakingLA.com, LLC." The company offers dating and relationship advice, and screens males as potential mates. In order to be listed as a potential husband on the website, a male must have a net worth of $5 million, have to be given a lobotomy, and thereafter answer "I love you, can I buy you something" to any questions asked by females who select him as a mate. In the Articles of Organization, Ally, Lin, Won-Suk, and Jen choose to be a manager-managed LLC. Lin and Jen are named the managers of the LLC. The website is an instant success as love-distressed females across the world seek mates from MatchmakingLA.com, LLC. Ally, seeing the success of MatchmakingLA.com, LLC, decides to open a competing business called "Studs&Duds.com" where she screens males as potential husbands. In order to be listed as a potential husband on the Studs&Duds.com web site, a male must have a net worth of $5 million, have to be given a lobotomy, and thereafter answer "I love you, can I buy you something" to any questions asked by females who select him as a mate. Ally's new website is a success and takes business away from MatchmakingLA.com. MatchmakingLA.com sues Ally to recover damages. Which of the following is true?
A. Ally has breached her duty of loyalty by competing with MatchmakingLA.com
B. All has breached her duty of care by competing with MatchmakingLA.com
C. Ally is not liable because she is protected by the Business Judgment Rule
D. Ally is not liable because she has not breached a duty of loyalty by competing with MatchmakingLA.com
E. Ally should use her own service
- 3. Quart-Size is a rapper whose rap is no longer rapping. The sales of Quart-Size's CDs are now quart-size, so on August 1, 2009 Quart-Size files for bankruptcy. Quart-Size does not qualify for a Chapter 7 bankruptcy, so he files for and is granted a Chapter 13 bankruptcy. A five-year payment plan is approved by the Bankruptcy Court. Which of the following is true?
A. Quart-Size receives a discharge on his debts on August 1, 2009
B. Quart-Size must pay his disposable income during the five- year payment plan to a trustee, who distributes the money to Quart-Size's creditors
C. Quart-Size receives a discharge on his debts on August 1, 2014, if all the payments from his disposable income have been paid as required by the payment plan
D. A and B
E. B and C
- 25. Oprah is president of Dieter's, Inc. The common stock of Dieter's is listed on the New York Stock Exchange ("NYSE"). The stock price of Dieter's goes up and down with Oprah's weight; therefore USC MBA students stay at home every afternoon and watch the Oprah TV show to see Oprah's weight in making their investment decisions; the MBA students fail to attend their portfolio analysis course at the USC MBA program that is offered at the same time as the Oprah TV show. On August 1, 2009, Oprah purchases 1,000 shares of Dieter's common stock for $100 per share over the NYSE. She does not possess any inside information. On November 1, 2009, Oprah leaves her job at Dieter's Inc. to become president of a rival company, Weight Watchers, Inc. On January 1, 2010, Oprah sells the 1,000 shares of Dieter's stock for $150 per share. She does not possess any inside information. Oprah is liable for violating which of the following?
A. Section 16(b) of the Securities Exchange Act of 1934
B. Section 10(b) of the Securities Exchange Act of 1934
C. Section 27 of the Securities Exchange Act of 1934
D. Section 5 of the Securities Act of 1933
E. None of the above
- 5. Samantha, an MBA student, is a reporter for the Daily Trojan daily newspaper. She writes a daily newspaper article called "Stock Picks" wherein she recommends stocks to buy long or sell short. She always tells the truth in her articles. Samantha writes her articles the day before they are published in the Daily Trojan. Samantha is such a good analyst that she is 90% right with her recommendations and predictions. Because of her analytical ability Samantha's "Stock Picks" articles are widely read and followed by other MBAs, Wall Street investment bankers and securities professionals who follow Samantha's advice and buy and sell short the stocks she recommends, and the market always "moves" up or down based on Samantha stock picks. Samantha, however, has been investing in each company discussed in her Daily Trojan newspaper article the day before the article appears in the newspaper. The U.S. government wants to sue Samantha for a violation of Section 10(b). What theory should the government assert against Samantha?
A. Derivative theory
B. Tipper-Tippee theory
C. Misappropriation theory
D. Issuer theory
E. Respondeat superior theory
- a E. None of the above
- b E. Article 9
- c D. Ally is not liable because she has not breached a duty of loyalty by competing with MatchmakingLA.com
- d C. Misappropriation theory
- e E. B and C
5 Multiple choice questions
- E. No, because consumers have been notified that the McDonald's Corporation is not liable for the franchisee's negligent acts
- B. The money becomes property of the bankruptcy estate
- C. Noerr doctrine
- D. A and C
- C. Section 2 of the Clayton Act
5 True/False questions
18. Jimmy, George, Bill, and George W. form a new corporation called "Planet Palm Springs Inc.", which will operate a new theme restaurant in Palm Springs, California to cater to retirees (old people). The restaurant will have canes, walkers, oxygen tanks, and other old people memorabilia hanging from the walls, and will play nonstop recordings by Frank "Blue Eyes" Sinatra, Bing Crosby, Dean Martin, and Connie Francis. Planet Palm Springs, Inc. wants to raise $10,000,000 from investors located and living anywhere in the United States, who have little or no income or assets. Planet Palm Springs Inc. can issue these new securities under which of the following?
A. Small offering exemption
B. Private placement exemption
C. Intrastate offering exemption
D. Nonissuer exemption
E. None of the above → E. None of the above
17. You are sitting at Starbucks coffee shop sipping on your double-nonfat-half-café-hold-the-foam-4-shot-hold-the-wip-Latte when you hear the two men at the next table talking. One is a nerdy looking guy with glasses and the other is a young guy in bluejeans. The two men shake hands and you hear the nerdy guy say "You got a deal. Microsoft Corporation will pay 300% premium for YouTube stock in our merger to be announced tomorrow." The young guy says "As president of YouTube Corporation, you got a deal." The two men toast with their double-nonfat-half-café-hold-the-foam-4-shot-hold-the-wip-Lattes. You gulp down your double-nonfat-half-café-hold-the-foam-4-shot-hold-the-wip-Latte and run to the nearest stockbroker and place your life savings of $500,000 on call options on YouTube stock. The next day the merger of Microsoft and YouTube is announced and you become a trillionaire. Which of the following statements is true?
A. You are not liable for violating Section 10(b)
B. You are liable for violating Section 10(b) under the misappropriation theory
C. You are liable for violating Section 10(b) under the tipper-tippee theory
D. You are liable for violating Section 10(b) as an insider
E. You are liable for violating Section 10(b) as a temporary insider → D. Area franchise
12. The Frog Inc. saga continues. Frog Inc. wants to retain its current French-socialist management during the bankruptcy proceedings. Although current management has missed the dietary changes of Americans to modern types of cuisine, management has not engaged in fraud nor wasted corporate assets. All managers agrees to obtain M.B.A. degrees from USC and become capitalist imperial dogs. They also agree to go to Charm School for one year. Management is therefore allowed to remain in place during the bankruptcy under which of the following doctrines?
A. Reaffirmation contract
B. Executory contract
C. Lien release
D. Debtor in possession
E. Cram down → A. Chapter 7
1. The 2005 Bankruptcy Act made it harder for individuals to qualify for Chapter 7 bankruptcy. Which of the following test(s) is (are) included in the 2005 Act to determine if an individual qualifies for Chapter 7 bankruptcy?
A. Rights Test
B. Means Test
C. Median Income Test
D. B and C
E. A, B and C → D. B and C
14. In 2004, Tube bought a house on the beach in Malibu, California for $500,000 in order to be closer to the waves so he can surf more often. Tube paid $100,000 cash and borrowed $400,000 in a first loan from Wells Fargo Bank secured by his Malibu house. In 2009, Tube, because he is surfing all of the time and makes no money, defaults on the loan and files and qualifies for Chapter 7 bankruptcy. Because of the 2006-2012 Depression in California, Tube's house is only worth $200,000 at the time of default. Wells Fargo Bank receives the house in bankruptcy and sells the house for $200,000 to Patience. Which of the following is (are) true?
A. Wells Fargo Bank properly sold the house to Patience
B. Wells Fargo Bank becomes an unsecured creditor in the bankruptcy proceeding for $200,000
C. Wells Fargo Bank would be able to recover a deficiency judgment for $200,000 against Tube
D. A and B
E. A, B, and C → D. B and C