Deck 5: Ethics and Contracts

Question 1

The withholding of material information in a contract relationship is an ethical issue as well as misrepresentation.

Answer 1

True

Question 2

Nonprofits have fallen victim to widespread Ponzi schemes.

Answer 2

True

Question 3

The Red Cross disclosed that 9-11-01 funds would be used for administrative purposes.

Answer 3

False

Question 4

The failure to disclose material information in negotiations is an ethical breach.

Question 5

Intentional breach of a contract carries a legal remedy, but it is also unethical.

Question 6

Long-term relationships create ethical and legal obligations between the parties through conduct and accommodations.

Question 7

Although you are not part of your company's engineering group, you have discovered a major flaw in the company's new paper-thin solar calculator. The calculator adds when the subtract button is pressed if there are more than three figures to the right of the decimal point. I t is not necessary for the company to take any action to correct the problem or refund money for those who already own the new calculator.

Question 8

Failure to disclose the dangers of a diet program is an ethical issue.

Question 9

Telling a customer that he needs repair work done on a vehicle when the vehicle is in fine condition is unethical and misrepresentation.

Question 10

Sears compensation system was tied to the number of repairs per mechanic.

Question 11

The Red Cross CEO resigned in protest over the use of Red Cross funds.

Question 12

The former governor of Virginia and his wife were both convicted of bribery.

Question 13

Part of Subway's defense on its 11-inch vs. 12-inch sub length is that bread rises differently.

Question 14

Although you are not part of your company's engineering group, you have discovered a major flaw in the company's new paper-thin solar calculator. The calculator adds when the subtract button is pressed if there are more than three figures to the right of the decimal point. Since it is not your area, you should do and say nothing.

Question 15

Nonprofits and their boards need not be concerned with conflicts of interest.

Question 16

The amount advertisers pay for online ads is based on data on user hits provided by sites.

Question 17

Taking advantage of a party in a contract situation due to the party's inexperience, and not due to any lack of disclosure on your part, is ethical.

Question 18

The failure to correct a known defect in a product is both an ethical lapse and a basis for a negligence claim.

Question 19

Nonprofits are permitted to use raised funds in any manner they deem acceptable.

Question 20

Checking the books and records of an organization is one method for establishing the legitimacy of its claims.

Question 21

Pension accounting for ERISA differed from pension accounting for the SEC.

Question 22

Facebook modified its advertising fees to base it on:

A) The average viewing time for all videos.
B) The average number of viewers per ad.
C) The average number of Facebook subscribers for the past quarter.
D) None of the above

Question 23

A company can be relieved of its pension obligations in bankruptcy.

Question 24

Intel's biggest obstacle in its Pentium chip flaw was:

A) The cost of replacement.
B) Admitting that there was a problem and acknowledging it to the public.
C) The hit to earnings if the sales were not made.
D) Both a and c
E) None of the above

Question 25

Facebook advertising fees were determined based on:

A) The average viewing time for videos.
B) The number of Facebook subscribers.
C) The number of hits per ad.
D) None of the above

Question 26

The Pension Protection Act of 2006 does not apply to all employers with pension plans.

Question 27

The typical number of loan renewals for subprime auto borrowers is:

A) Six.
B) Seven.
C) Eight.
D) Nine.

Question 28

Return policies affect the compensation of sales people in department stores.

Question 29

Katy Perry has the support of the archdiocese in her purchase of the convent.

Question 30

The FDA cannot control the content of celebrity Tweets on prescription drugs.

Question 31

What error did Intel discover in its Pentium chip in July 1994?

A) That the chip was contaminated
B) That there was a floating point error that caused errors in division calculations
C) That the chip could cause computer viruses
D) None of the above

Question 32

Pfizer was able to complete its research park in New London, Connecticut.

Question 33

What was the total cost if Intel replaced all chips?

A) $100 million
B) $200 million
C) $260 million
D) $320 million

Question 34

What did Intel discover when it ran tests on the Pentium chip?

A) That it would make an error once every 27,000 years
B) That the chance of an error was one in 9 billion
C) That the floating point error problem was not one that required attention
D) a and b only
E) a, b and c

Question 35

What company changed Intel's reaction to the flawed chips?

A) Dell
B) Microsoft
C) IBM
D) Apple

Question 36

How much money had Intel spent developing the Pentium chip?

A) $150 million
B) $500 million
C) $600 million
D) $1 billion

Question 37

What is the correct rate of auto repossession on subprime auto loans?

A) One in five
B) One in six
C) One in seven
D) One in nine

Question 38

Who made the Intel error problem public?

A) Intel
B) A mathematician professor
C) IBM
D) None of the above

Question 39

One of the causes of underfunding of pensions were experts' assumptions about rates of return.

Question 40

What was Intel's original proposal on the flawed chips?

A) To replace them without questions
B) To replace them only for computer users who had to do calculations
C) To replace them only for a fee
D) None of the above

Question 41

Who provides the data for investment requirements for pension funds?

A) Investment advisers
B) Actuaries
C) The federal government
D) ERISA

Question 42

In the Kelo case, what happened after the court ruled against the homeowners?

A) Their houses were torn down and Pfizer built its facilities
B) The city changed its plans and the houses were not torn down
C) The houses were torn down, but the site remains undeveloped
D) The homeowners appealed again and won the right to keep their homes

Question 43

What did experts find about the two-page agreement between Mark Zuckerberg and Paul Ceglia?

A) That although it was informal, it was a valid contract
B) That Ceglia owned one-half of Facebook
C) That the document had been physically altered and aged
D) Both b and c

Question 44

What did then-Governor McDonnell do for Jonnie Williams in exchange for his gifts?

A) He introduced Mr. Williams to Virginia's secretary of health and human services
B) He, along with Mrs. McDonnell, repaid Mr. Williams for the gifts
C) He gave a speech endorsing Mr. Williams' products
D) He purchased stock in Mr. Williams' company

Question 45

What happened to Donald Kennedy, the president of Stanford University, after the audit of the school's overhead research costs?

A) He was made a U.S. Ambassador
B) He was charged criminally
C) He resigned as president of Stanford
D) He successfully challenged the government's position

Question 46

What was the basis for suits against Subway for their 12-inch claims about sandwiches that were only 11 inches long?

A) Fraud
B) Deceptive advertising
C) Consumer fraud
D) There is no basis for litigation

Question 47

What conflict of interest arises with pension actuaries?

A) They are compensated by the government regulatory agency for pensions
B) Employers often signal their concerns about a finding of pension underfunding
C) They are usually working directly with the auditors
D) They also work for the Pension Benefit Guarantee Corporation

Question 48

What relationships are now being regulated as a result of underfunded pension plans?

A) Auditors of the funds and their clients
B) Union officials and auditors of pension funds
C) Actuaries of funds and the pension plan sponsors
D) All of the above

Question 49

What is a condition to most pay-day loans?

A) That the borrower pay 75% interest
B) That the borrower agree to some type of collateral
C) That the borrower agree to give the lender access to the borrower's checking account
D) That the borrower waive the right to litigation

Question 50

What percentage of auto loan borrowers have a credit score above 780?

A) 67%
B) 51%
C) 40%
D) 22%

Question 51

Which of the following have received tax incentives for locating plants or companies in certain states?

A) Nike
B) Susette Kelo
C) John Cougar Mellencamp
D) All of the above

Question 52

Which of the following was not a gift given by Jonnie Williams to the McDonnell?

A) Rolex watch
B) Use of his vacation home
C) Payments for the McDonnells' daughter's wedding reception
D) All of the above were gifts given by Williams to the McDonnells

Question 53

Which of the following is an FDA requirement for celebrity tweets?

A) Celebrity tweets about prescription drugs are prohibited by the FDA
B) Preapproval by the FDA of all celebrity tweets about prescription drugs
C) Celebrity drug testing prior to their posting tweets about prescription drugs
D) None of the above

Question 54

What happens under a car title loan?

A) A default results in the debtor's loss of ownership in the car
B) That no interest is paid until the default
C) That as long as the creditor holds the title, the debtor has time to pay without the creditor being able to sell the car
D) None of the above

Question 55

Which of the following have removed plants, companies, or offices from states or local areas after having received benefits for locating there?

A) Pfizer
B) GM
C) Nike
D) Oliver Stone

Question 56

What did Mrs. McDonnell do for Jonnie Williams in exchange for his gifts?

A) She made sure that the state of Virginia purchased his products
B) She invited him to dinner at the governor's mansion
C) She gave a speech in support of Mr. Williams' products
D) She eventually paid him back for the gifts

Question 57

What other ethical issues arose at Sears in addition to the auto repair shop problems?

A) Improper collection of debts from debtors in or discharged in bankruptcy
B) Sears hired employees away from competitors
C) Both a and b
D) None of the above

Question 58

What was a reason for the city of Detroit's bankruptcy?

A) The disparity between the amount due in pension payments and the amount in the fund and coming in
B) Payments for gun-related crimes
C) The GM pension plan
D) All of the above

Question 59

What is the interest rate range for subprime auto loans?

A) 17-24%
B) 20-30%
C) 50-75%
D) 80-500%

Question 60

What is Chase's policy on pay-day loans?

A) Chase makes the loans after full disclosure
B) Chase is re-examining allowing pay-day lenders access to customers' checking accounts
C) Chase is the number one pay-day lender in the United States
D) Chase refuses to make withdrawals for pay-day lenders

Question 61

Why did Stanford withdraw the submitted expenses?

A) Because it felt it needed to do more than what was lawful
B) Because of acute public attention
C) Donald Kennedy was troubled by the costs
D) All of the above

Question 62

List the FDA requirements for celebrity tweets for pharmaceutical companies.

Question 63

Discuss the problems that led to underfunded pensions.

Question 64

Based on Katy Perry's experience in trying to purchase the convent, offer some advice.

Question 65

What advice would you offer to elected officials on the acceptance of gifts based on what you studied in the McDonnells' case in Virginia?

Question 66

Discuss why Stanford's public statements about its submission of overhead costs for federal reimbursement changed over the course of several months.

Question 67

Explain the stakeholders, risks, and benefits when government entities take private property to be used by private companies as part of an economic development plan.

Question 68

Which parties claimed to be the owner of the convent in the Katy Perry case?

A) A small group of surviving nuns
B) The diocese
C) Developer Dana Holister
D) All of the above

Question 69

Explain what a good disclosure statement would look like if online sites were providing information about user access of their sites to those who seek to advertise.

Question 70

Based on the Intel case, develop guidelines for companies that discover defects in their products.

Question 71

Discuss the ethics of the pension accounting processes companies used prior to the Pension Protection Act of 2006.

Question 72

Explain the impact of "no-cost - few restrictions returns" policies. Be sure to discuss the stakeholders affected.