Deck 30: Conducting Business in Cyberspace

Question 1

Words like e-business, e-tailing, e-marketing, and e-contracts found their way into the English vocabulary, and companies started taking the Internet seriously as an important new means of doing business.

Answer 1

True

Question 2

The rightful owners of music often have granted permission and received royalties from pirated music; they have not made any efforts to stop companies from distributing music online.

Answer 2

False

Question 3

The Web, or cyberspace, is also considered a "place" under the Securities Exchange Act of 1934, and securities are regularly bought and sold electronically.

Answer 3

True

Question 4

The federal Digital Millennium Copyright Act of 1998 provides that SIPs are usually liable for copyright infringements by their subscribers.

Question 5

There is no requirement for corrective advertising under the FTC, and hence, it does not inform Web page visitors if the previous information was deceptive.

Question 6

Frequently, offers on Web sites include a button that must be clicked by the user with his or her mouse to indicate acceptance; however, clicking the button does not necessarily denote that the offer has been accepted.

Question 7

In 1992, the SEC created a computerized system, known as the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system that allows companies to:

A) upload required information directly.
B) sell its shares to the public online.
C) make advertisements on the web.
D) register with the Federal Trade Commission.

Question 8

It is important to note that trading in the stock of the firm by company officials is called insider trading, but as long as it is reported, it is not illegal.

Question 9

A document that provides relevant and important information about the company, its businesses, and its prospects is known as:

A) a memorandum of association.
B) articles of association.
C) letters of incorporation.
D) a prospectus.

Question 10

It is expensive to proceed against a defendant in a court case; a person who is the victim of a breach of contract will frequently seek to have the dispute resolved using alternative means.

Question 11

Pursuant to the Electronic Signatures in Global and National Commerce Act (ESIGN) of 2000, electronic contracts containing electronic signatures are just as enforceable as those that are printed on paper.

Question 12

The Securities Act of 1933 covers the sale of securities (stock, bonds, and other forms of investments) in the:

A) primary market.
B) secondary market.
C) consumer market.
D) labor market.

Question 13

Under the Securities Act of 1933, the issuing company may not provide prospective investors with a prospectus.

Question 14

The Securities and Exchange Commission ensures that prospective investors have access to full and correct information about the company's securities they are interested in purchasing.

Question 15

A place where a corporation or an issuer sells its securities to the public is known as a:

A) commodity market.
B) primary market.
C) secondary market.
D) labor market.

Question 16

Issuers of securities must register the securities with the:

A) U.S. Copyright Commission.
B) U.S. Patent and Trademark Office.
C) Securities and Exchange Commission.
D) Federal Trade Commission.

Question 17

It is not a mandate under the Securities Exchange Act of 1934 for companies to periodically release important business information to the public and to investors.

Question 18

Firms that conduct business on the Web are subject to the same legal restrictions as are the traditional brick-and-mortar firms.

Question 19

Use taxes are extremely difficult to collect on small items sold on the Web, and most states do not make efforts to collect use taxes.

Question 20

The Securities and Exchange Commission acts to make certain that investors do not violate the Securities Exchange Commission's anti-touting rules.

Question 21

The Securities Exchange Act of 1934 covers the trading of securities in the _____________, defined as the place where one member of the public sells securities to another member of the public.

A) primary market
B) secondary market
C) consumer market
D) labor market

Question 22

A period of time during which no state may levy sales taxes on Internet Service Providers is known as a(n):

A) tallage.
B) scutage.
C) moratorium.
D) ad valorem tax.

Question 23

When a person who has confidential information about a particular company purchases shares of the company's stock with the intention of selling these shares for a higher price when the information is released to the general public, then it is known as:

A) touting.
B) churning.
C) buffering.
D) insider trading.

Question 24

Means of Alternative Dispute Resolution include:

A) counseling and analysis.
B) mediation and arbitration.
C) preliminary and prohibitory injunctions.
D) temporary and permanent injunctions.

Question 25

The federal agency responsible for ensuring that advertising in the United States is truthful is the:

A) Securities and Exchange Commission.
B) Federal Trade Commission.
C) Environmental Protection Agency .
D) Consumer Product Safety Commission.

Question 26

All of the following are the advantages of alternative disputes resolution system, EXCEPT:

A) speedy disposal.
B) privacy.
C) finality.
D) publicity.

Question 27

In recent years, it has become quite popular for people to trade and download music and other forms of entertainment (movies, games, etc.) from the Web onto compact disks and other digital storage devices. The legal issue associated with this is:

A) copyright infringement.
B) patent infringement.
C) trademark infringement.
D) service mark infringement.

Question 28

An advertisement that contains an important misrepresentation, omission, or practice likely to mislead a consumer who acts reasonably under the circumstances is known as a(n):

A) adversarial opinion.
B) descriptive advertisement.
C) deceptive advertisement.
D) prejudiced opinion.

Question 29

In 1998, an act was passed by the Congress that established a moratorium on taxing ISPs on the services they provide to computer users. This act was called the:

A) Digital Millennium Copyright Act.
B) Securities Exchange Act.
C) Statute of Fraud.
D) Internet Tax Freedom Act.

Question 30

The electronic contracts containing electronic signatures are just as enforceable as those that are printed on paper is a statement made by a federal statute called the:

A) Sherman Antitrust Act of 1890.
B) Global Anti-Semitism Review Act of 2004.
C) Digital Millennium Copyright Act of 1998.
D) Electronic Signatures in Global and National Commerce Act of 2000.

Question 31

If the Web site visitor has had an ample opportunity to read the terms of an agreement, and if those terms are not unreasonable, a(n):

A) void contract exists.
B) voidable contract exists.
C) valid contract exists.
D) unenforceable contract exists.

Question 32

A system in which contract disputes and other disagreements are resolved by using means other than a lawsuit is known as:

A) alternative dispute resolution.
B) environmental dispute resolution.
C) employment dispute resolution.
D) Internet dispute resolution.

Question 33

The thing that is extremely difficult to collect on small items sold on the Web, and most states do not make efforts to collect, is:

A) income tax.
B) use tax.
C) corporation tax.
D) property tax.

Question 34

In documents pertaining to wills, codicils, and related testamentary papers, ESIGN does not apply to electronic:

A) transaction details.
B) symbols.
C) signatures.
D) witnesses.

Question 35

In 1992, the Supreme Court of the United States ruled that a location must have a link or tie to a sale in order for the location to collect sales tax (Quill v. North Dakota, 504 U.S. 298). This link or tie is referred to as (a):

A) purchase.
B) bond.
C) nexus.
D) label.

Question 36

The illegal activity of using insider information for personal gain is considered a(n):

A) manipulative and deceptive practice.
B) honest approach to trading.
C) practice of forgery.
D) mandatory civil rights encroachment.

Question 37

The Federal Trade Commission can issue a(n) ____________, in effect compelling the publisher to eliminate the Internet reference.

A) restraining order
B) garnishment order
C) interim order
D) cease-and-desist order

Question 38

A state wishing to collect a sales tax must levy the tax on a:

A) buyer who resides within the state.
B) seller who resides within the state.
C) middleman who resides within the state.
D) buyer who resides outside the state.

Question 39

The federal Digital Millennium Copyright Act of 1998 (DMCA) provides that Internet Service Providers are not liable for copyright infringements by their subscribers if they adopt and reasonably implement a(n):

A) purchase policy.
B) termination policy.
C) sales policy.
D) insurance policy.

Question 40

When an investor who owns shares of a company's stock posts notices online-in chat rooms, on Web pages, on blogs, and elsewhere-that indicate that the value of the stocks will increase, then such an act is known as:

A) cyber squatting.
B) churning.
C) touting.
D) insider trading.

Question 41

Describe the Digital Millennium Copyright Act.

Question 42

Explain the role of the Federal Trade Commission (FTC), and the options it has regarding deceptive advertisements.

Question 43

List the six key settings in which the law applies to conducting business on the Web.