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HRM 522 Week 5 Midterm Exam – Strayer NEW

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Chapters 1 Through 6

Chapter 1

1. Principles are

a. laws and regulations that guide behavior in the world of business. b. mores, values, and customs that guide behavior in general.

c. specific and pervasive boundaries for behavior that are universal and absolute.

d. the obligations businesses assume to maximize their positive impact and minimize their negative impact on stakeholders.

e. the mores, values, and customs that parents teach their children.

2. Social responsibility is

a. an organization's obligation to maximize its positive effects and minimize its negative effects on stakeholders. b. principles and standards that guide behavior in the world of business.

c. a business's responsibility not to pollute the environment.

d. a business's responsibility to manufacture products that function properly. e. charitable contributions made by a business to enhance its image.

3. The

was/were enacted to restore confidence in financial reporting and business ethics after the accounting

scandals of the early 2000s.

a. Defense Industry Initiative on Business Ethics and Conduct b. Sarbanes-Oxley Act

c. Federal Sentencing Guidelines for Organizations d. Foreign Corrupt Practices Act

e. Dodd-Frank Wall Street Reform and Consumer Protection Act

4. The term business ethics is best described by the following statement:

a. It is the study and philosophy of human conduct, with an emphasis on determining right and wrong.

b. It is an "inquiry into the nature and grounds of morality where the term morality is taken to mean moral judgments, standards and rules of conduct."

c. It is the "study of the general nature of morals and of specific moral choices; moral philosophy; and the rules or standards governing the conduct of the members of a profession."

d. It is an organization's obligation to maximize its positive effects and minimize its negative effects on stakeholders.

e. It comprises the principles, values, and standards that guide behavior in the world of business.

5. Which of the following is not one of the rights spelled out by John F. Kennedy in his "Consumers' Bill of Rights"?

a. The right to choose b. The right to safety

c. The right to be informed d. The right to be ethical

e. The right to be heard

6. During the 1990s the institutionalization of business ethics was largely driven by which piece of legislation?

a. Sarbanes-Oxley Act

b. Federal Sentencing Guidelines for Organizations

c. Dodd-Frank Wall Street Reform and Consumer Protection Act d. Foreign Corrupt Practices Act

e. Global Sullivan Principles

7. Business ethics, as a field, has passed through which of the following states?

a. A field of study to theological discussion to recognition of social issues b. Recognition of social issues to a field of study to theological discussion c. A field of study to recognition of social issues to theological discussion d. Recognition of social issues to theological discussion to a field of study e. Theological discussion to recognition of social issues to a field of study

8. The 1960s saw a rise of consumerism. What is consumerism?

a. An increase in consumer rights by organizations and governments b. The growth of international retail chain stores

c. Activities undertaken by independent individuals, and groups to protect their rights as consumers d. The widespread adoption of consumer oriented marketing strategies among businesses

e. Organizations’ tendency to seek ways to take advantage of consumers

9. Ethics is a part of decision making

a. at all levels of work and management.

b. primarily at the upper management levels of an organization. c. mostly for policy makers.

d. that is less important than other decision making processes. e. only at that lower levels of organizational management.

10. Which of the following was developed in the 1980s to guide corporate support for ethical conduct by establishing a method for discussing best practices?

a. Federal Sentencing Guidelines for Organizations

b. Defense Industry Initiative on Business Ethics and Conduct c. Corporate codes of conduct

d. United States Sentencing Commission e. MERCOSUR

11. The

focus(es) on firms taking action to prevent and detect business misconduct in cooperation with

government regulation.

a. United States Sentencing Commission

b. Defense Industry Initiative on Business Ethics and Conduct c. World Trade Organization

d. United Nations Global Compact

e. Federal Sentencing Guidelines for Organizations

12. The study of business ethics is important to better understand all of the following except

a. that a person's own moral philosophies and decision-making experience may not be sufficient to guide him or her in the business world.

b. how and why people make ethical or unethical decisions.

c. how to cope with conflicts between a person's own values and those of the organization in which he or she works.

d. that business ethics is entirely an extension of an individual's own personal ethics. e. how to identify ethical issues arising in the business world.

13. According to the role of ethical culture in performance, all of these are drivers of profit except

a. trust.

b. investor loyalty.

c. employee commitment. d. customer satisfaction.

e. opportunity for misconduct.

14. More than a compliance program, business ethics is becoming a. a management issue to achieve competitive advantage.

b. less accepted by society.

c. mainly a government regulatory issue.

d. an initiative led by nonprofit organizations.

e. a program that decreases profits but increases societal benefits.

15. Having acceptable personal ethics is probably not going to be sufficient to handle complex business ethical issues when an individual has

a. family concerns. b. an unethical boss.

c. limited business experience. d. financial training.

e. a marketing background.

16. One of the major ethical issues President Obama’s administration focused on was

a. decreasing environmental legislation. b. deregulation.

c. tax decreases.

d. incentives to oil companies.

e. health care and consumer protection.

17. Which of the following is generally not considered a business ethics issue?

a. Harassment

b. Accounting fraud c. Employee theft

d. Misuse of organizational resources e. Corporate hierarchy

18. Which represented a far-reaching change to organizational control and accounting systems, making securities fraud a criminal offense?

a. Council on Economic Priorities and Social Accountability 8000. b. Sarbanes-Oxley Act.

c. Consumer Protection Act.

d. Defense Industry Initiative on Business Ethics and Conduct.

e. Dodd-Frank Wall Street Reform and Consumer Protection Act.

19. The Foreign Corrupt Practices Act outlawed a. accounting fraud.

b. price collusion.

c. corruption in government.

d. bribery of officials in other countries. e. executive misconduct.

20. Which of the following was not a provision of the Sarbanes-Oxley Act?

a. It stiffened penalties for corporate fraud.

b. It created an accounting oversight board that requires corporations to establish codes of ethics for financial reporting.

c. It required top executives to sign off on their firms' financial statements. d. It outlawed bribery of officials in other countries.

e. It made securities fraud a criminal offense.

21. Which of the following is not cited as an example of a global collaborative effort to establish standards of business conduct?

a. Council on Economic Priorities' Social Accountability 8000 b. Ethical Trading Initiative

c. U.S. Apparel Industry Partnership

d. United States Sentencing Commission e. World Trade Organization

22. Because of Sarbanes-Oxley, publicly traded companies must develop financial reporting.

a. ethics officers

b. ethics programs c. codes of ethics d. legal counsel

e. accountants

to assist in maintaining transparency in

23. is essential in building long-term relationships between businesses and consumers. a. Profits

b. Dividends c. Trust

d. Hubris

e. Codes of ethics

24. The Dodd-Frank Wall Street Reform and Consumer Protection Act a. was very popular among Wall Street bankers.

b. represented only modest reform.

c. came out of theological discussions in the 1920s.

d. was designed to make the financial services industry more responsible. e. made it mandatory for public corporations to hire ethics officers.

25. In the Reagan/Bush eras, the major focus of the business world was on a. self-regulation rather than regulation by government.

b. decreasing the number of mergers.

c. decreasing the multinational presence in the U.S. marketplace. d. increasing government influence on the economic arena.

e. improving business ethics.

26. The six principles of the Defense Industry Initiative on Business Ethics and Conduct became the foundation for a. Better Business Bureau ethical guidelines.

b. the Federal Sentencing Guidelines for Organizations. c. the Ethical Trading Initiative.

d. the Federal Trade Commission compliance requirements. e. the Sarbanes-Oxley Act.

27. Ethical culture is defined as

a. rules, standards, and moral principles regarding what is right or wrong in specific situations. b. the establishment and enforcement of ethical codes throughout the organization.

c. the development of rules and norms that are socially enforced.

d. the codification of laws to reward organizations for taking action to prevent misconduct. e. acceptable behavior as defined by the company and industry.

28. The Federal Sentencing Guidelines for Organizations set the tone for organizational ethics compliance programs by a. codifying into law incentives for organizations to take action such as developing ethical compliance programs

to prevent misconduct.

b. forcing all organizations to develop mandatory reporting systems.

c. eliminating most of the federal legislation that created inefficient and time-consuming activities for businesses. d. providing a study of moral philosophies.

e. providing an examination of company codes of ethics.

29. Which of the following statements about the Federal Sentencing Guidelines for Organizations is false?

a. They use a routine mechanical approach that forces all firms to use the same means to avert serious penalties.

b. They strive to prevent misconduct.

c. They encourage companies to develop standards and procedures capable of detecting and preventing misconduct.

d. They utilize a carrot and stick approach by taking preventive action against misconduct.

e. They encourage the appointment of high-level personnel responsible for oversight of the compliance program.

30. Which of the following is not one of the benefits of being ethical and socially responsible in business?

a. Greater employee commitment

b. A high degree of employee dissent

c. Improved customer trust and satisfaction d. Increased investor loyalty

e. Better financial performance

31. Employees' perceptions of their firm as having an ethical climate leads to a. lack of focus on goals.

b. greater focus on education.

c. increased community involvement.

d. improved relationships with competitors. e. enhanced performance.

32. Employees feel less pressure to compromise ethically, observe less misconduct, are more satisfied with their organizations, and feel more valued when

a. they are new at their jobs.

b. they are paid to ignore problems in the workplace. c. they do not agree with an organization’s values.

d. they have very high compensation.

e. they see honesty, respect, and trust applied in the workplace.

33. Investors are concerned about business ethics because they know that misconduct can a. foster stability.

b. improve employee commitment. c. improve customer loyalty.

d. lower stock value and prices.

e. complicate business financial reporting.

34. Most organizations with strong ethical climates usually focus on the core value of placing interests first. a. customers'

b. employees'

c. stockholders' d. suppliers'

e. distributors'

35. Which of the following is not something a firm might do to encourage organizational ethics and compliance?

a. Employee ethics training

b. Hiring a compliance officer

c. Ignoring potential ethical issues d. Writing a code of ethics

e. Conducting an ethics and compliance audit.

36. How does ethics contribute to customer satisfaction?

37. Discuss the evolution of business ethics as a field of study from before 1960 to the present.

38. Why is it important that businesspeople study business ethics?

39. We all learn values from sources such as family, religion, and school. Why might these sources of individual values not prove very helpful when making complex business decisions?

40. Discuss the current state of business ethics in the twenty-first century.

41. How do values and judgments play a critical role when we make ethical decisions?

Chapter 2

1. Those who have a claim in some aspect of a firm's products, operations, markets, industry, and outcomes are known as

a. shareholders. b. stockholders. c. stakeholders. d. claimholders.

e. special-interest groups.

2. Stakeholders' power over businesses stems from their a. ability to withdraw or withhold resources.

b. ability to generate profits. c. media impact.

d. political influence. e. stock ownership.

3. Which of the following do not typically engage in transactions with a company and thus are not essential for its survival?

a. Employees

b. Secondary stakeholders c. Primary stakeholders

d. Investors

e. Customers

4. A firm that makes use of a

recognizes other stakeholders beyond investors, employees, and suppliers, and

explicitly acknowledges the two-way dialog that exists between a firm's internal and external environments. a. stakeholder model of corporate governance

b. stakeholder bias c. code of ethics

d. stakeholder interaction model e. corporate interface model

5. The degree to which a firm understands and addresses stakeholder demands can be referred to as a. a stakeholder orientation.

b. a shareholder orientation.

c. the stakeholder interaction model. d. a two-way street.

e. a continuum.

6. Which of the following industries tends to generate a high level of trust from consumers and stakeholders?

a. Insurance

b. Technology c. Banks

d. Mortgage lenders e. Financial services

7. Which of the following is not a benefit that primary stakeholders tend to provide to organizations?

a. Supplies of capital and resources. b. Expertise and leadership

c. Word-of-mouth promotion d. Infrastructure

e. Pro-bono bookkeeping

8. A stakeholder group that is absolutely necessary for a firm’s survival is defined as

a. direct.

b. tertiary.

c. secondary.

d. special-interest. e. primary.

9. When unethical acts are discovered in a firm, in most instances a. they are caused by unwilling participants.

b. the cause is due to external stakeholders.

c. the perpetrators are caught and prosecuted.

d. there was knowing cooperation or complicity from within the company. e. the cause is a corrupt Board of Directors.

10. Which of the following is not a method typically employed by firms when researching relevant stakeholder groups?

a. Surveys

b. Focus groups

c. Internet searches d. Press reviews

e. Guessing

11. A stakeholder orientation can be viewed as a(n)

a. necessity for business success. b. continuum.

c. polarizing concept.

d. good marketing ploy. e. expensive proposition.

12. Shareholders provide resources to an organization that are critical to long term success. Which of the following does the book suggest that suppliers offer?

a. The promise of customer loyalty

b. Material resources and/or intangible knowledge c. Infrastructure

d. Revenue

e. Leadership skills

13. Which of the following is not associated with the stakeholder interaction model?

a. Involves a two-way relationship between firm and stakeholders b. Recognizes the input of investors, employees, and suppliers

c. Explicitly acknowledges dialogue with a firm's internal environment d. Explicitly acknowledges dialogue with a firm's external environment

e. Identifies the mass media, special interest groups, competitors, and trade associations as primary stakeholders

14. The first of the three activities that are associated with the stakeholder orientation is the a. organization-wide generation of data.

b. organization's responsiveness to intelligence. c. set of consumer attributes identified.

d. organizational strategy of target markets.

e. human relations department's set of priorities.

15. Public health and safety and support of local organizations are issues most relevant to which stakeholder group?

a. Investors

b. Community c. Suppliers

d. Customers e. Employees

16. Minimizing the use of energy and reducing emissions and waste are issues of importance to which stakeholder?

a. Environmental groups b. Suppliers

c. Employees

d. Industry leaders e. Investors

17. The idea that the mission of business is to produce goods and services at a profit, thus maximizing its contribution to society is associated with

a. Adam Smith.

b. Theodore Levitt. c. Norman Bowie. d. Herman Miller

e. Milton Friedman.

18. The originator of the idea of the invisible hand, which is a fundamental concept in free market capitalism, was a. Adam Smith.

b. Theodore Levitt. c. Norman Bowie. d. Herman Miller

e. Milton Friedman.

19. Some economists believe that if companies address economic and legal issues, they are satisfying the demands of society, and that trying to anticipate and meet additional needs would be almost impossible. Which economist’s theory are they following most closely with this belief?

a. Adam Smith.

b. Theodore Levitt. c. Norman Bowie. d. Herman Miller

e. Milton Friedman.

20. In ascending order, Carroll's four levels of social responsibility are a. ethical, legal, economic, philanthropic.

b. economic, ethical philanthropic, legal. c. economic, legal, ethical, philanthropic. d. legal, ethical, economic, philanthropic. e. ethical, legal, moral, economic.

21. The term used to express how a firm meets its stakeholder expectations of its economic, legal, ethical, and philanthropic responsibilities is

a. reputation.

b. corporate citizenship.

c. corporate ethical audit. d. ethical citizenship.

e. fiduciary duties.

22. In corporate governance, is the process of auditing and improving organizational decisions and actions. a. profit

b. loyalty

c. accountability d. control

e. diligence

23. Accountability, oversight, and control all fall under the definition and implementation of corporate a. profit.

b. loyalty. c. care.

d. governance. e. diligence.

24. Major corporate governance issues normally involve decisions. (Choose the response that is most correct)

a. strategic-level b. tactical-level

c. divisional-level d. marketing-level e. accounting-level

25. Which of the following is a major ethical concern among corporate boards of directors?

a. Compensation

b. The non-traditional directorship approach c. Dividend reporting

d. Corporate social audits e. Debt swaps

26. One policy to address the issue of executive pay was implemented by J.P. Morgan, it stated that

a. there should be no limit on what top executives can earn.

b. managers should earn no more than twenty times the pay of other employees. c. top managers should make the same amount as other employees.

d. employees can determine how much managers make.

e. the government should determine the worth of each manager’s service.

27. The specific steps for implementing the stakeholder perspective do not include which of the following?

a. Identifying stakeholder groups b. Identifying stakeholder issues

c. Identifying and gaining stakeholder feedback d. Identifying and gaining government feedback

e. Assessing organizational commitment to social responsibility groups

28. What are the four levels of social responsibility?

a. Financial, religious, ethical, and philanthropic

b. Ethical, philanthropic, selfish, and short-sighted c. Economic, long-term, ethical, and philanthropic. d. Legal, economic, ethical, and philanthropic

e. Economic, compliance, legal, and philanthropic

29. The model is founded in classic economic precepts. a. economic

b. shareholder c. stakeholder d. board

e. ISO

30. Which of the following are not typically secondary stakeholders?

a. Television news anchors b. Special-interest groups

c. Customers

d. Trade associations e. Journalists

31. Which of the following are not typically primary stakeholders?

a. Customers

b. Trade associations c. Employees

d. Shareholders e. Suppliers

32. Why do critics argue that high compensation for boards of directors is a bad thing?

a. It is too expensive for the organization.

b. It could cause conflicts of interest between the directors and the organization. c. It is not fair to poorly compensated employees.

d. High pay will render the board less complacent.

e. Board of director compensation is not a major issue.

33. Board members being linked to more than one company is an example of a. strategic philanthropy.

b. stakeholder commitment. c. interlocking directorate.

d. conflict of interest. e. an illegal activity.

34. What is the first step in implementing a stakeholder perspective in an organization?

a. Identifying resources and determining urgency b. Identifying stakeholder groups

c. Identifying stakeholder issues

d. Assessing the corporate culture

e. Assessing organizational commitment to social responsibility

35. A stakeholder orientation is not complete unless it includes a. clear accounting procedures.

b. major financing activities. c. marketing strategy.

d. feedback from special-interest groups.

e. activities that actually address stakeholder issues.

36. Compare and contrast the stakeholder and shareholder models of corporate governance.

37. Why is ethical misconduct more difficult to overcome than poor financial performance?

38. Discuss the difference between primary and secondary stakeholders in the stakeholder interaction model and give examples for each type.

39. Why do some businesspeople and scholars question whether ethics should have a role in business?

40. Discuss three corporate governance issues, why they are defined as issues, and how you would solve them. Use examples in your answer.

Chapter 3

1. An ethical issue is a problem, situation, or opportunity a. that has no correct answer.

b. that harms the environment.

c. requiring society as a whole to choose among several actions that must be evaluated as right or wrong.

d. requiring an individual, group, or organization to choose among several actions that must be evaluated as right or wrong, ethical or unethical.

e. requiring an individual, group, or organization to choose between harming consumers or the environment and earning more profits.

2. Ethical issues in business typically arise because of conflicts between individuals' personal moral philosophies and values and the

a. values and attitudes of the organization in which they work. b. values and attitudes of the society in which they live.

c. values and attitudes of the organization in which they work and the society in which they live. d. laws and regulations of the country in which they live.

e. values and attitudes of their parents and religion.

3. is an important element of virtue and means being whole, sound, and in unimpaired condition. a. Optimization

b. Ethical issue c. Honesty

d. Trust

e. Integrity

4. A court found an oil company guilty of placing profits over the safety and well-being of its employees. This situation can be classified as

a. ethical.

b. unethical.

c. an ethical issue. d. a dilemma.

e. a justice issue.

5. A person uncomfortable with his employer's unspoken policy of hiring only white men is experiencing a. a conflict of interest.

b. an ethical issue. c. a feeling of guilt.

d. cognitive dissonance. e. a moral attribute.

6. Issues related to fairness and honesty may arise because business is sometimes regarded as a a. legal case, where everything must be done to the letter of the law.

b. contest, with the most ethical firm "winning."

c. guerilla war where anything goes in the fight for consumers' dollars. d. game governed by its own rules rather than those of society.

e. game governed by the rules of society.

7. War metaphors are common in business. This kind of mindset can be dangerous for business leaders because a. it may lead executives to become violent.

b. it may foster the idea that honesty is unnecessary in business. c. it may lead organizations to be excessively aggressive.

d. business is not like warfare and the metaphors are not appropriate. e. business is more like a game than a war.

8. Conflicts of interest exist when employees must choose whether to

a. advance their own personal interests, those of the organization, or those of some other group. b. advance the interests of the organization or those of society.

c. accept bribes or not.

d. carry out an assignment they perceive to be unethical. e. report an unethical coworker.

9. is the offering of something of value in order to gain an illicit advantage. a. Shoulder surfing

b. Hacking

c. Gift exchange

d. Conflicts of interest e. Bribery

10. Concerns involving copyright infringement on books, movies and music, and other illegally produced goods relate to which type of ethical issue?

a. Conflict of interest b. Honesty

c. Communications d. Discrimination

e. Intellectual property rights

11.

is defined as any purposeful communication that deceives, manipulates, or conceals facts in order to create a false impression.

a. Stealing b. Lying

c. Fraud

d. Misappropriation e. Accounting fraud

12. In marketing communications, lying causes predicaments for companies because it destroys a. trust.

b. honor.

c. confidence. d. integrity.

e. products.

13. When a commercial states that a product is superior to any other on the market, the marketer risks accusations of a. concealed facts.

b. false labeling.

c. deceptive advertising. d. concealed facts.

e. puffery.

14. Optimization is defined as

a. the quality of being just, equitable, and impartial. b. a trade-off between equity and efficiency.

c. an interchange of giving and receiving in social relationships.

d. how wealth or income is distributed between employees within a company.

e. a lack of integrity, incomplete disclosure, and an unwillingness to tell the truth.

15. Which of the following has been identified by the Ethics Resource Center as the leading form of observed misconduct in organizations?

a. Discrimination b. Bullying

c. Lying

d. Misuse of company resources e. Sexual harassment

16. An activity is probably ethical if it

a. is approved of by most individuals in the organization and is customary in the industry.

b. is approved of by no one in the organization, but has been carried out in the industry before. c. is customary in the industry.

d. is not illegal.

e. does not make consumers feel cheated, deceived, or manipulated.

17. The first step toward understanding business ethics is to a. know your company's ethical policies.

b. know your own morals and philosophies. c. know society's ethical policies.

d. develop ethical-issue awareness.

e. develop a set of decision-making rules.

18. Among retail stores, is a larger problem than customer shoplifting. a. poor stock performance

b. weak leadership

c. internal employee theft d. misuse of merchandise e. employee dissatisfaction

19. The ethical decision-making process begins a. with a conflict of interest.

b. when an individual experiences a conflict between his or her values and those of his or her firm. c. when stakeholders trigger ethical issue awareness and individuals openly discuss it with others. d. with a conflict in values.

e. when an individual experiences a conflict between his or her values and those of society.

20. Which of the following is not a side-effect of being the victim of workplace bullying?

a. Increased productivity b. Sleep disturbance

c. Depression

d. Increased sick days e. Stomach problems

21. Accountants must abide by a strict code of ethics that defines their responsibilities to a. their clients only.

b. their clients and the public interest. c. the public only.

d. their investors and shareholders. e. government regulators.

22. Which of the following statements is most correct?

a. Affirmative action programs require quotas to govern employment decisions. b. Affirmative action programs have eliminated discrimination in employment.

c. Affirmative action programs are required in all organizations by law.

d. Affirmative action programs involve efforts to recruit, hire, train, and promote qualified individuals from groups that have traditionally been discriminated against on the basis of race, gender, or other characteristics.

e. Affirmative action programs involve efforts to avoid recruiting, hiring, training, and promoting qualified individuals from groups that have traditionally been discriminated against on the basis of race, gender, or other characteristics.

23. Which of the following is not a question you need to ask when you suspect that workplace bullying has occurred?

a. Is your boss treating you well and compensating you adequately?

b. Is your boss asking obviously impossible things from you without training and stating that, once completed, the work is never good enough?

c. Are surprise meetings called without your knowledge?

d. Have others at work told you to stop working, talking, or socializing with them?

e. Are you never left alone to do your job without interference?

24. is associated with a hostile workplace where someone considered a target is threatened, harassed, belittled, or verbally abused.

a. A code of conduct b. Sexual harassment c. Coercive power

d. Bullying e. Rewards

25. Which of the following is not a consequence of ethical misconduct?

a. Decreased reputation

b. Shaken customer loyalty

c. Reduced investor confidence d. Increased sales

e. Legal actions by wronged parties

26. The Age Discrimination in Employment Act specifically outlaws hiring practices that discriminate against people a. who are under the age of 18.

b. who are between 16 and 20. c. who are between 39-69.

d. who are past retirement age.

e. who are younger than 18 and older than 49.

27. Abusive or intimidating behavior is the most common ethical problem for employees. Which of the following is not

related to this concept?

a. Physical threats

b. False accusations c. Being annoying

d. Profanity

e. Performance probation

28. The

makes it illegal for individuals, firms, or third parties doing business in American markets to “make

payments to foreign government officials to assist in obtaining or retaining business.”

a. U.S. Foreign Corrupt Practices Act (FCPA)

b. Kyoto Protocol

c. World Trade Organization (WTO)

d. Consumer Protection Act e. Gramm-Leach-Bliley Act

29. Mr. Smith told his client, Mr. Jabar, who was not an IT expert, that the new software systems were much better than his existing ones. To convince Mr. Jabar, Mr. Smith used a great deal of technical jargon that his client did not really understand. Mr. Smith did this intentionally to confuse Mr. Jabar. This is an example of

a. false advertising. b. commission lying. c. omission lying.

d. noise.

e. surrogate lying.

30. involves tricking individuals into revealing their passwords or other valuable corporate information. a. Shoulder surfing

b. Remote hacking

c. Social engineering d. Physical hacking e. Dumpster diving

31. When Devon looked at what another employee was typing in order to get a password, he committed a. shoulder surfing.

b. whacking

c. discrimination

d. password guessing e. hacking

32. A company can be sued for discrimination if it a. hires minorities.

b. maintains reasonable minority standards.

c. discharges a minority individual, but has a just cause for doing so. d. uses age as a hiring or firing criterion.

e. has more men than women on staff.

33. Affirmative action programs

a. involve the promotion of unqualified employees. b. are not imposed by federal law on employers.

c. are not very commonly used anymore because there is no need to protect minorities. d. only involve the training of individuals.

e. involve the recruitment, hiring, promotion, and training of qualified individuals.

34. What type of fraud involves intentional deception on the part of an individual or group in order to derive an unfair economic advantage over an organization?

a. Channel

b. Integrative c. Consumer d. Product

e. Conventional

35. What type of fraudulent activity could involve a consumer staging an accident to seek damages?

a. Whacking b. Duplicity c. Guile

d. Defamation e. Collusion

36. What type of fraudulent activity involves an employee who assists a consumer in fraud?

a. Whacking b. Duplicity c. Guile

d. Defamation e. Collusion

37. Prior to the financial meltdown, bond ratings agencies were accused of having

because they were paid by the

organizations that they rated. The organizations would shop around for the agency that gave them the best rating. a. high ethical standards

b. excessively complicated systems c. a hostile workplace

d. conflicts of interest

e. a good business model

38. are used to obtain or retain business and are not generally considered illegal in the U.S. a. Facilitation payments

b. Bribes c. Gifts

d. Coercive techniques e. Threats

39. Discuss how one goes about recognizing an ethical issue.

40. List three business problems, situations, or opportunities that you believe are ethical issues. Explain why.

41. Describe the different methods of obtaining corporate intelligence that competitors commonly use.

42. What is a conflict of interest? Provide an example.

43. What are the different definitions of bribery?

44. Discuss the factors that go into creating a hostile work environment. Why is this a bad thing? Give an example of a hostile work environment.

Chapter 4

1. Which of the following is not an aspect of the institutionalization of social responsibility?

a. Voluntary practices b. Legal responsibilities c. Core practices

d. Familial responsibilities e. Strategic philanthropy

2. Which of the following acts can be classified as procompetitive legislation?

a. Equal Pay Act of 1963 b. Civil Rights Act of 1964

c. McCarran-Ferguson Act of 1944 d. Sherman Antitrust Act of 1890

e. Occupational Safety and Health Act of 1970

3. Which of the following acts exempted the insurance industry from antitrust legislation?

a. Equal Pay Act of 1963 b. Civil Rights Act of 1964

c. McCarran-Ferguson Act of 1944 d. Sherman Antitrust Act of 1890

e. Occupational Safety and Health Act of 1970

4. Which of the following acts, passed in response to public outrage over conditions described in Upton Sinclair's The

Jungle, was the first consumer protection legislation?

a. Civil Rights Act of 1964

b. Sherman Antitrust Act of 1890

c. Magnuson-Moss Warranty Act of 1974 d. Consumer Product Safety Act of 1972 e. Pure Food and Drug Act of 1906

5. The

was established after the latest financial crisis, in response to a situation that caused many consumers to

lose their homes.

a. Environmental Protection Agency b. World Bank

c. Consumer Financial Protection Bureau d. World Trade Organization

e. Sarbanes-Oxley Act

6. Which of the following is not a provision of the Sarbanes-Oxley Act?

a. Strengthens penalties for corporate fraud

b. Discourages the creation of ethical and legal compliance programs c. Requires codes of ethics for financial reporting in corporations

d. Makes fraudulent financial reporting a criminal offense e. Requires greater transparency in financial reporting

7. Which of the forces of the business environment involves the rivalry among businesses for customers and profits?

a. The economic dimension b. The legal dimension

c. The competitive dimension

d. The technological dimension

e. The voluntary responsibilities dimension

8. The

regulates tobacco, dietary supplements, vaccines, veterinary drugs, medical devices, cosmetics, products

that give off radiation, and biological products. a. World Trade Organization

b. Consumer Financial Protection Agency c. Department of Justice

d. Environmental Protection Agency e. The Food and Drug Administration

9. Which of the following groups is not a group that receives special legal protections?

a. The elderly b. Children

c. Senior citizens

d. The highly educated e. Young consumers

10. The

was called “a sweeping overhaul of the financial regulatory system…on a scale not seen since the

reforms that followed the Great Depression.”

a. Equal Pay Act

b. Americans with Disabilities Act

c. Dodd-Frank Wall Street Reform and Consumer Protection Act d. Age Discrimination in Employment Act

e. VII of the Civil Rights Act

11. law defines the rights and duties of individuals and organizations (including businesses). a. Civil

b. Criminal

c. Competitive

d. Administrative e. Regulatory

12.

law not only prohibits specific actions in business such as fraud, theft, or securities trading violations, but also imposes fines or imprisonment as punishment for breaking the law.

a. Civil

b. Criminal

c. Competitive

d. Administrative e. Regulatory

13. Which of the following is not a provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act?

a. Increases the accountability and transparency of financial institutions b. Creates a bureau to educate consumers in financial literacy

c. Creates an organization to pay the bills of low-income consumers d. Create incentives for whistle-blowers to come forward

e. Increases oversight of the financial industry

14.

is the synergistic and mutually beneficial use of an organization’s core competencies and resources to deal

with key stakeholders so as to bring about organizational and societal benefits. a. Social responsibility

b. Business ethics

c. Corporate philanthropy d. Strategic philanthropy

e. Cause-related marketing

15. Anticompetitive strategies that focus on weakening or destroying a competitor have spurred antitrust legislation and include all of the following except

a. sustained price cuts. b. free samples.

c. discriminatory pricing. d. price collusion.

e. corporate espionage.

16. Which is not one of the four sources of criminal and civil laws?

a. Judicial law

b. Common law

c. Constitutional law d. Administrative law e. Statutory law

17. The

is an independent agency within the Federal Reserve System that “regulate[s] the offering and provision

of consumer financial products or services under the Federal consumer financial laws.”

a. Consumer Financial Protection Bureau b. Federal Reserve

c. World Trade Organization d. Department of Justice

e. Federal Trade Commission

18. The primary objective of U.S. antitrust laws is to

a. protect consumers from high prices and foreign products. b. protect domestic businesses.

c. protect employees.

d. promote strategies that enhance business welfare over consumer welfare.

e. distinguish competitive strategies that enhance consumer welfare from those that reduce it.

19. What is a primary reason why some small businesses resist the opening of large chain retailers like Walmart or

Home Depot?

a. Because the large size creates economies of scale and they can charge lower prices b. Because the selection in the stores is too large

c. Because large retailers attract crime to neighborhoods in which they are based d. Because community leaders do not like the top management

e. Because large retailers almost never hire local workers as employees

20.

focus(es) on developing sound organizational practices and integrity for financial and nonfinancial

performance measures, rather than on an individual’s morals.

a. The Dodd-Frank Wall Street Reform and Consumer Protection Act b. Compliance

c. Organizational ethics d. Core practices

e. The Sarbanes Oxley Act

21. Which of the following is not one of the seven steps that the U.S. Sentencing Commission requires for an effective compliance program?

a. Develop a code of conduct

b. Provide oversight by high-ranking personnel

c. Create a communication system for disseminating standards and procedures d. Monitor and audit systems designed to detect misconduct

e. Comply with ISO 14000 guidelines

22. The Sarbanes-Oxley Act created the establish rules and standards for auditing.

to oversee the accounting firms that audit public corporations and to

a. Public Company Accounting Oversight Board b. Corporate Accounting Oversight Commission c. Enron Accounting Fraud Administration

d. Occupational Health and Safety Administration e. Equal Employment Opportunity Commission

23. responsibilities relate to a business’s contributions to stakeholders.

a. Economic b. Legal

c. Ethical

d. Voluntary

e. Social responsiveness

24. Passed by Congress in 1991, the compliance programs.

a. Sarbanes-Oxley Act

created incentives for organizations to develop and implement ethical

b. U.S. Sentencing Commission's Guidelines for Ethical Compliance c. Ethical Compliance Act

d. Social Responsiveness Compliance Act

e. Federal Sentencing Guidelines for Organizations

25. Donation of computer equipment to schools by Toshiba would be associated with responsibilities. a. economic

b. voluntary c. legal

d. ethical

e. minimum

26. By prohibiting accounting firms from providing both auditing and consulting services to the same corporate clients without permission, the Sarbanes-Oxley Act is attempting to eliminate

a. conflicts of interest. b. cronyism.

c. reporting transparency. d. corporate espionage.

e. dual reporting.

27. Which of the following is not a benefit to businesses of engaging in voluntary responsibilities?

a. Help create an ethical culture and values that can act as a buffer to organizational misconduct b. Reduce government involvement by providing assistance to stakeholders

c. Develop employee leadership skills

d. Improve employee compensation and retention e. Improve the quality of life in communities

28. Companies that will most likely be found in violation of procompetitive legislation. a. pollute waterways

b. knowingly harm consumers c. contract with sweatshops

d. establish monopolies e. help consumers

29. tie(s) an organization’s product(s) directly to a social concern through a marketing program.

a. Voluntary contributions b. Cause-related marketing c. Strategic philanthropy

d. Corporate giving

e. Employee benefits

30. Title VII of the Civil Rights Act of 1964

a. prohibits discrimination on the basis of race, color, sex, religion, or national origin. b. penalizes the top executives in an organization for misconduct.

c. is basically the same as the Sarbanes-Oxley Act.

d. discourages whistle-blowers from reporting misconduct. e. prohibits pay discrimination on the basis of gender.

31. Cause related marketing can affect consumer cause are seen as a good fit.

a. individual ethics b. tastes

c. perceptions d. budgets

e. buying patterns

, if consumers are sympathetic to the cause and the brand and

32. Who provides information to managers, investors, tax authorities, and other stakeholders who make resource allocation decisions for corporations?

a. Accountants

b. Federal regulators

c. The Securities and Exchange Commission d. The Department of Justice

e. Human Resources departments

33. The of ethics involves embedding values, norms, and artifacts in organizations, industries, and society. a. institutionalization

b. rationalization

c. commercialization d. mobilization

e. enforcement

34. Which of the following is not a reason why the institutionalization of business ethics has progressed in recent decades?

a. Institutionalization of ethics is now mandated for all organizations by governments around the world b. Stakeholders have recognized the need for improving business ethics

c. The government has stepped in when scandals and misconduct have damaged key constituents of businesses d. Gatekeepers have been questioned as to their contributions to major scandals

e. Highly ethical companies tend to be more profitable than those suffering from misconduct issues

35. Part of the reason why credit ratings firms did not catch major problems prior to the global financial meltdown of

2008 was because they were paid by the firms that they rank, which creates a. economies of scale.

b. synergy.

c. a conflict of interest. d. cooperation.

e. efficiency.

36. Investigations into the financial rating industry after the financial meltdown of 2008 found all of the following except

a. analysts cut corners when faced with less time to perform due diligence. b. analysts’ ratings were inaccurate.

c. many high ratings were based on inadequate historical data.

d. analysts were overwhelmed with the volume and complexity of trades.

e. most analysts were completely untrained and unprepared to do their jobs.

37. Some, especially those in business, complain that the Sarbanes-Oxley Act and similar legislation a. is excessively complex and financially burdensome.

b. is not necessary. c. is fair to all firms.

d. has reduced restatements of financial reports. e. is too simplistic.

38. An ethical organizational culture creates an environment in which to structure behavior that is then evaluated by stakeholders. The key elements of an organizational culture include all of the following except

a. values. b. norms.

c. artifacts.

d. legal compliance.

e. employee compensation

39. Which of the following provide incentives for developing core practices within a firm that could help ensure ethical and legal compliance?

a. Department of Justice and Open Compliance Ethics Group b. Department of Justice and the Sarbanes-Oxley Act

c. Federal Sentencing Guidelines for Organizations and the Sarbanes-Oxley Act d. Food and Drug Administration and the Sarbanes-Oxley Act

e. Securities and Exchange Commission and the Sarbanes-Oxley Act

40. Laws and regulations change over time; however, in the United States the thrust of most business legislation can be summed up as

a. any practice is permitted.

b. any practice is permitted that does not substantially reduce competition and harm consumers or society.

c. any practice is permitted that does not substantially harm consumers or society, but this applies only within the

United States.

d. any practice is permitted that does not harm the environment. e. any practice is permitted that does not break the law.

41. Why do you think the costs of compliance with Sarbanes Oxley go down over time?

42. According to the text, the opinions of society, as expressed through legislation, can change over time and different courts and government legislatures may take different views about the acceptability of specific business activities. Why is this so?

43. What ethical issues affecting consumers and society as a whole are created by unfair competition?

44. Society often expects a lot from business. Do you think that it is possible to balance profit and other business objectives with the goals and desires of society? Why or why not?

Chapter 5

1. Which of the following is the first step in the ethical decision making process?

a. Being socialized into the firm's corporate culture

b. Applying a personal moral philosophy in order to individualize the ethical decision making process

c. Recognizing that an issue requires an individual or work group to make a choice that ultimately will be judged by stakeholders as right or wrong

d. Soliciting the opinions of others in a work group or in the overall business in order to gain feedback e. Enforcing the firm's ethical standards with rewards and punishment

2. Which of the following is not one of the six "spheres of influence" to which individuals are subject when confronted with an ethical issue?

a. Educational attainment b. Workplace

c. Family

d. Legal system e. Community

3. The perceived relevance or importance of an ethical issue to the individual, work group, or organization is a. organizational culture.

b. immediate job context. c. ethical issue intensity. d. leadership.

e. locus of control.

4. Studies have found that more than a third of the unethical situations that lower and middle-level managers face come from _____.

a. stakeholder expectations and pressures. b. pressures to satisfy customers.

c. pressures from the government to perform at a high level.

d. internal pressures and ambiguity surrounding internal organizational rules. e. investor expectations.

5. According to the ethical decision-making framework, the absence of punishment provides a(n)

behavior. a. reason

b. significant other c. individual factor d. opportunity

e. ethical issue intensity

for unethical

6. have been found to decrease unethical practices and increase positive work behavior. a. High educational attainment levels

b. High levels of community involvement c. Charismatic leaders

d. Strong religious beliefs e. Good personal values

7. involves subordinates simply following the directives of a superior without question. It demonstrates the influence that significant others can exert in the workplace.

a. Obedience to authority b. Locus of control

c. Opportunity

d. Transactional leadership e. Immediate job context

8. Multiple elements work on individuals to affect their behavior. While an individual may intend to do the right thing,

can alter this intent. a. cognitive dissonance

b. familial expectations c. religious beliefs

d. the desire for financial gain

e. organizational or social forces

9. If management fails to identify and educate employees about ethical problem areas, ethical issues may not reach the critical

a. awareness level. b. aptitude level.

c. ethical level.

d. organizational level. e. individual level.

10. The

can be defined as a set of values, norms, and artifacts, including ways of solving problems shared by

members of an organization. a. corporate culture

b. intentions of a corporate c. ethical issue awareness

d. determination of a corporation e. individual factors

11. Which of the following would not be considered a negative reinforcement of employee behavior?

a. Demotions b. Firings

c. Ignoring the behavior d. Reprimands

e. Pay penalties

12. Codes, rules, and compliance are essential in organizations. However, an organization built on to develop a high integrity corporate culture.

a. a charismatic leader

b. the preferences of the CEO

c. the grapevine

d. formal relationships

e. informal relationships

is more likely

13. Following the ethical directives of a superior relates to a. an internal locus of control.

b. obedience to authority. c. moral intensity.

d. gender.

e. ethical issue intensity.

14. Which of the following is not considered a significant other group in the workplace?

a. Peers

b. Managers c. Spouses

d. Coworkers

e. Subordinates

15. Studies have shown that than any other factor.

a. significant others b. religion

c. education

d. chief executive officers e. ethical issues

within the organization have more impact on a worker's decisions on a daily basis

16. External and internal rewards relate to which part of the ethical decision-making framework?

a. Individual factors b. Significant others

c. Cognitive moral development d. Obedience to authority

e. Opportunity

17. Which of the following is not an issue that helps in business ethics evaluations and decisions?

a. Ethical issue intensity b. Individual factors

c. Organizational factors d. Personal guilt

e. Opportunity

18. is the first sign that an unethical decision has occurred. a. Guilt

b. Reward

c. Punishment

d. Cognitive dissonance e. Happiness

19. People who believe in , go with the flow because they feel the events in their lives are uncontrollable. a. ethical decision making

b. internal locus of control c. an ethical culture

d. external locus of control e. significant others.

20. Which of the following is not an individual factor that affects business ethics?

a. Nationality b. Age

c. Religion

d. Significant others e. Education

21.

is an organizational factor that gives a company specific characteristics. Over time, stakeholders begin to see the company as like a living organism with a mind and will of its own.

a. Oversight

b. Significant others c. Corporate culture d. The ethical climate e. The legal climate

22. An ethical corporate culture needs

along with

to establish an ethics program and monitor the complex

ethical decisions being made by employees . a. individual ethics; ethical issue intensity

b. ethical issue intensity; ethics training

c. organizational factors; individual factors d. employee evaluations; good intentions

e. shared values; proper oversight

23. Those who have influence in a work group are referred to as significant others and include a. peers, managers, coworkers, and subordinates.

b. family members, peers, and coworkers. c. spouses and friends.

d. employees in similar job situations. e. employees who hold the same job.

24. Research concerning nationality and the ability to make ethical decisions a. shows no relationship between the two.

b. is hard to interpret in a business context because of cultural differences.

c. suggests that organizations should be very concerned about an employee's nationality. d. suggests that corporations pay a lot of attention to such research.

e. suggests that the influence of nationality on corporate culture is growing.

25. The relationship between business ethics and age a. shows a negative correlation.

b. is simple. Greater experience leads to better ethical decision making.

c. is complex, although experience helps older employees make ethical decisions.

d. suggests that employees with less experience have a greater ability to deal with complex industry-specific ethical issues.

e. does not demonstrate a statistically significant correlation.

26. Employees that see themselves as going with the flow because that's all they can do have a(n)

a. external locus of control. b. moral intensity

c. obedience to authority d. opportunity

e. internal locus of control.

27. For people who begin the value shift that leads to unethical decisions, which of the following is not a usual justification to reduce and eliminate guilt?

a. I need a paycheck and can't afford to quit right now. b. Those around me are doing it so why shouldn't I?

c. If I don't do this, I might not be able to get a good reference from my boss when I leave. d. If I don't do this, I might never be promoted.

e. This is in keeping with my personal morals and the code of conduct, so it is okay.

28. is the ability to perceive whether a situation or decision has an ethical dimension. a. Ethical issue intensity

b. Locus of control

c. Ethical awareness d. Moral intensity

e. Opportunity

29.

others.

relates to individuals' perceptions of social pressure and the harm they believe their decisions will have on

a. Ethical awareness b. Moral intensity

c. Individual factors

d. Ethical issue intensity e. Social awareness

30. The ethical decision making process in business includes all of the following except

a. Individual factors b. Opportunity

c. Ethical issue intensity

d. Making ethical decisions e. Organizational factors

31.

culture involves values and norms that prescribe a wide range of behavior for organizational members, while culture reflects the integrity of decisions made and is a function of many factors, including corporate policies,

top management's leadership on ethical issues, the influence of coworkers, and the opportunity for unethical behavior.

a. Ethical, corporate b. External, internal c. Corporate, ethical d. Positive, negative

e. Compromising, collaborative

32. All of the following are true with regards to organizational factors except

a. Employees approach ethical issues on the basis of what they learned from others in the organization. b. An alignment between a person's own values and the values of the organization help create positive

organizational outcomes.

c. Congruence in personal and organizational values is related to commitment, satisfaction, motivation, ethics, work stress, and anxiety.

d. Ethical choices in organizations are most often made individually.

e. Just as a family guides an individual, specific industries give behavioral cues to firms.

33. The includes the motivational "carrots and sticks" superiors use to influence employee behavior. a. Obedience to authority

b. Immediate job context c. Locus of control

d. Normative approach e. Descriptive approach

34. All of the following are true with regards to opportunity and ethical decision making except

a. Despite the existence of rules, misconduct can still occur without proper oversight.

b. The opportunities that employees have for unethical behavior in an organization can be eliminated through formal codes, policies, and rules adequately enforced by management.

c. Opportunity also comes from knowledge.

d. The opportunity for unethical behavior can be eliminated with aggressive enforcement of codes and rules. e. Opportunity results from conditions that either provide rewards or fail to erect barriers against unethical

behavior.

35. When we discuss issue.

a. Normative b. Individual

c. Descriptive

d. Organizational e. Values-based

approaches, we are talking about how organizational decision makers should approach an

36. By incorporating objectives into corporate core values, companies begin to view as significant. a. shareholder, stakeholders

b. stakeholder, shareholders c. CEO, CEOs

d. customer, customers

e. stakeholder, stakeholders

37. Normative business ethics takes into account the standards.

a. Descriptive b. Political

c. Social

d. Economic e. Normative

realities outside the legal realm in the form of industry

38. institutions include religion, education, and individuals such as the family unit. a. Social

b. Conservative c. Economic

d. Liberal e. Political

39. All of the following are true regarding institutions except

a. Stakeholders closely align with institutions.

b. The regulatory system aligns with political institutions.

c. There is no clear link between institutional theory and the stakeholder orientation of management. d. Competition relates to economic institutions.

e. Personal values and norms derive from social institutions.

40. High levels of create a higher probability that firms cut corners because margins are usually low. a. Profit

b. Return

c. Cooperation d. Competition e. Loss

41. The thought experiment used by John Rawls that examined how individuals would formulate principles if they did not know what their future position in society would be is called

a. Equality principle b. Utilitarian veil

c. Liberty principle

d. Universal principle e. Veil of ignorance

42. The

states that economic and social equalities should be arranged to provide the most benefit to the least-

advantaged members of society. a. Equality principle

b. Difference principle

c. Constitutional principle d. Liberty principle

e. Justice principle

43. Values have all the following characteristics except

a. Provides guidance to organizations b. Subjective and related to choice

c. Widely accepted

d. Used to develop norms

e. Differs across cultures and firms

44. Companies take basic and translate them into core . a. Customs, values

b. Values, principles c. Cultures, principles d. Cultures, customs e. Principles, values

45. Organizations that have ethics programs based on a

orientation are found to make a greater contribution than

those based simply on compliance, or obeying laws and regulations. a. Customer

b. Political

c. Principles d. Values

e. Social

Essay

46. The ethical decision-making framework includes the concepts of ethical issue intensity, individual factors, organizational factors, and opportunity. Discuss how these concepts influence the ethical decision-making process.

47. Trace the ethical decision-making process. You may find it helpful to apply the model to a real business situation or to a hypothetical ethical issue you develop yourself.

48. Discuss how the three categories of institutions (political, economic, and social) are important in establishing a foundation for normative values.

49. Describe and demonstrate some of the similarities and differences between principles and values. Why are principles and values important normative considerations in ethical decision making?

50. Discuss, with examples, at least three ways that opportunity can affect the decision making process.

Chapter 6

1. Moral philosophy refers to

a. a subject that most businesspeople do not consider very important. b. the morality of business activities.

c. the principles or rules that people use to decide what is right and wrong. d. the legality of business activities.

e. the principles or rules that policymakers use to create legislation.

2. Which moral philosophy evaluates the morality of an action on the basis of its consequences for everyone affected

(seeks the greatest good for the greatest number)?

a. Act deontology b. Rule deontology c. Egoism

d. Utilitarianism e. Hedonism

3. Which moral philosophy considers an act to be morally right or acceptable if it produces some desired result?

a. Teleology

b. Deontology

c. The relativist perspective d. Ethical formalism

e. Hedonism

4. Which moral philosophy focuses on the rights of individuals and on the intentions associated with a particular behavior, rather than its consequences?

a. Deontology

b. The relativist perspective c. Teleology

d. Egoism

e. Utilitarianism

5. are person-specific, whereas meet business objectives.

a. Organizational factors; business ethics b. Codes of conduct; individual factors

c. Individual factors; codes of conduct d. Business ethics; moral philosophies

e. Moral philosophies; business ethics

are based on decisions made by groups or when carrying out tasks to

6. According to Kohlberg's model, as a person progresses through the stages of moral development, and with time, education, and experience, he/she

a. is unlikely to change his/her values and ethical behavior. b. may change his/her values and ethical behavior.

c. will likely be promoted.

d. will depend more on the input of significant others in ethical decision making. e. will experience less opportunity to behave unethically.

7. An individual who defines what is right by considering his/her duty to society, not just to other specific people, is in which of Kohlberg's stages of cognitive moral development?

a. Punishment and obedience

b. Individual instrumental purpose and exchange

c. Mutual interpersonal expectations, relationships, and conformity d. Social system and conscience maintenance

e. Prior rights, social contract, or utility

8. Which is the last of Kohlberg's stages of cognitive moral development?

a. Individual instrumental purpose and exchange b. Need achievement

c. Social system and conscience maintenance d. Punishment and obedience

e. Universal ethical principles

9. A person who offers a facilitation payment in order to secure a contract that will keep her company from going bankrupt and laying off hundreds of employees may be a(n)

a. egoist.

b. teleologist. c. utilitarian. d. relativist.

e. humanitarian.

10. Which moral philosophy evaluates the morality of an action on the basis of its conformity to general moral principles and respect for individual rights?

a. The relativist perspective b. Act utilitarianism

c. Rule utilitarianism d. Act deontology

e. Rule deontology

11.

is considered the father of free market capitalism. He believed that business was and should be guided by the morals of good men.

a. John Maynard Keynes b. Henry Kissinger

c. George Washington d. Adam Smith

e. Lawrence Kohlberg

12. _____ believe that no one thing is intrinsically good. a. Hedonists

b. Pluralists c. Relativists

d. Deontologists e. Teleologists

13. Kant's categorical imperative and the Golden Rule are examples of which moral philosophy?

a. Teleology

b. Deontology

c. The relativist perspective d. Egoism

e. Utilitarianism

14. A marketing manager who orders that a manufacturing plant be refitted to make it safer for workers, no matter what the cost, may be a(n) because he believes in the rights of all individuals.

a. egoist

b. utilitarian

c. deontologist d. relativist

e. hedonist

15. Which moral philosophy evaluates the morality of an action on the basis of principles or rules designed to promote the greatest overall utility rather than by examining situations individually?

a. Rule utilitarianism b. Act utilitarianism c. Rule deontology

d. Act deontology e. Egoism

16. Which moral philosophy evaluates the morality of an action on the basis of the equity, fairness, and impartiality of the action, with rules serving as guidelines in the decision-making process?

a. Rule utilitarianism b. Act utilitarianism c. Rule deontology

d. Act deontology

e. The relativist perspective

17. Which moral perspective defines ethical behavior subjectively from the unique experiences of individuals and groups?

a. Virtue ethics b. Egoism

c. The relativist perspective d. Absolutism

e. Justice

18. Through time an act can come to be viewed as unethical under which of the following philosophies and perspectives?

a. The relativist perspective b. Teleology

c. Deontology d. Egoism

e. Rule deontology

19.

typically focuses on the end result of actions and happiness created by them, whereas the means and motives by which actions are justified.

a. Pragmatism; hedonism

b. Deontology; pragmatism c. Utilitarianism; deontology

d. Utilitarianism; a goodness theory

e. A goodness theory; an obligation theory

emphasizes

20. An individual who believes that an action is ethical because others within his or her company and industry regularly engage in the activity is probably a(n)

a. utilitarian. b. relativist.

c. teleologist.

d. deontologist. e. egoist.

21. Enlightened egoism

a. is when an individual puts spiritual feelings above all others. b. centers completely on the short-term well-being of others. c. centers on one's short-term self-interest.

d. centers on one's longterm selfinterest but takes others’ wellbeing into account.

e. centers on the long-term well-being of others.

22. Which moral philosophy is based on the premise that equal respect must be given to all persons?

a. The relativist perspective b. Deontology

c. Egoism

d. Teleology

e. Utilitarianism

23.

have lower ethical issue sensitivity, meaning they are less likely to detect ethical issues. They may be more committed to completing projects and more dedicated to group values and objectives.

a. Relativists b. Hedonists

c. Pragmatists

d. Deontologists e. Teleologists

24. justice is based on the evaluation of outcomes or results of the business relationship. a. Procedural

b. Interactional c. Distributive d. Ethical

e. Egotistical

25. Kohlberg's six stages of cognitive moral development can be reduced to three levels of ethical concern. Persons at the second level

a. define right as that which conforms to the expectations of good behavior of the larger society. b. see beyond the norms, laws, and authority of groups or individuals.

c. are concerned with their immediate interests and with external rewards and punishments. d. are concerned with their long-term interests and with internal rewards and punishments. e. are unethical.

26.

argues that ethical behavior involves not only adhering to conventional moral standards but also considering

what a mature person with a “good” moral character would deem appropriate.

a. Act utilitarianism b. Virtue ethics

c. Reciprocity d. Hedonism

e. Rule deontology

27. When a person defines right and wrong on the basis of legal contracts, he or she is using which of Kohlberg's stages of development?

a. Punishment and obedience (1st stage)

b. Mutual interpersonal expectations, relationships, and conformity (3rd stage)

c. Social system and conscience maintenance (4th stage)

d. Prior rights, social contract, or utility (5th stage)

e. Universal ethical principles (6th stage)

28.

deals with the issue of what individuals feel they are due based on their rights and performance in the workplace, and therefore is more likely to be based on deontological moral philosophies than on teleological or utilitarian ones.

a. Rights

b. Virtue ethics c. Justice

d. Relativism e. Egoism

29. A central problem with relativism is

a. that it emphasizes people’s differences, not similarities.

b. that few people believe that these principles are important. c. that they are very complicated.

d. that they represent unattainable goals.

e. that many feel that virtue ethics only works in theory.

30. Which is not considered a white collar crime?

a. Corporate tax evasion b. Credit card fraud

c. Insider trading d. Identity theft

e. Mugging someone

31. An individual who emphasizes others rather than himself or herself in making decisions is in which of the following of

Kohlberg's stages of development?

a. Universal ethical principles (6th stage)

b. Mutual interpersonal expectations, relationships, and conformity (3rd stage)

c. Social system and conscience maintenance (4th stage)

d. Punishment and obedience (1st stage)

e. Prior rights, social contract, or utility (5th stage)

32. Eric views animal research in the pharmaceutical industry as a way to improve drugs that will benefit mankind.

Which moral philosophy most closely represents his viewpoint?

a. Egoism

b. Relativism

c. Humanitarianism d. Utilitarianism

e. Individualism

33. In Kohlberg’s model, the stage of mutual interpersonal expectations, relationships, and conformity (Stage 3) differs from the stage of individual instrumental purpose and exchange (Stage 2) in terms of the individual’s motives in

a. considering fairness to others. b. maintaining the social order.

c. considering duty to society.

d. upholding the basic values of society. e. maintaining obedience to authority.

34. The elements of and truthfulness. a. egoism

b. utilitarianism c. deontology

d. moral philosophy

e. virtue

important to business transactions have been defined as trust, self-control, empathy, fairness,

35. justice considers the processes and activities that produce the outcome or results. a. Disruptive

b. Procedural

c. Interactional

d. Communications e. Evaluative

36. What is white collar crime and why has it become such a widespread problem?

37. Compare and contrast the two teleological philosophies: egoism and utilitarianism. Include a discussion of the bases that each type uses to evaluate the morality of activities.

38. Compare and contrast the two moral philosophies: teleology and deontology. Discuss the bases each philosophy type uses to evaluate the morality of a particular activity.

39. Discuss the distinctions between the rule and act categories of utilitarianism and deontology. Why do you think some people evaluate the morality of an action on the basis of the action itself, whereas others evaluate it in terms of its conformity to particular moral principles or rules of conduct?

40. Explain how the levels of Kohlberg's model of cognitive moral development may influence a person's perception of and response to an ethical issue.

#HRM 522 Week 5 Midterm Exam – Strayer NEW

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ECO 410 Week 4 Quiz – Strayer

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Quiz 3 Chapter 5 and 6

Chapter 5

The Continuing Global Financial Crisis

5.1 The Credit Crisis of 2008-2009

Multiple Choice

1) Investment banks and stock brokerages have traditionally been regulated by the:

A) Federal Reserve System (FED).

B) Federal Deposit Insurance Corporation (FDIC).

C) Securities and Exchange Commission (SEC).

D) Internal Revenue Service (IRS).

2) The Glass-Steagall Act of 1933:

A) separated commercial banking activities from investment banking activities.

B) created the Federal Reserve System.

C) developed the system of commercial bank deposit insurance.

D) all of the above

3) Which of the following is NOT another term for a prime mortgage loan?

A) conventional loan

B) top-qual loan

C) conforming loan

D) All of the above are suitable terms for a prime mortgage loan.

4) The process of turning an illiquid asset into a liquid saleable asset is called:

A) swapping.

B) wrapping.

C) securitization.

D) creationism.

5) Asset-backed securities (ABSs) may be securitized based on:

A) auto loans.

B) home-equity loans.

C) credit card receivables.

D) all of the above

6) A ________ is a financial intermediation device that allowed the participant to borrow short and lend long.

A) sub-prime loan

B) structured investment vehicle

C) non-conforming loan

D) all of the above

7) A ________ is a securitized financial instrument that is sold to the market in tranches representing different levels of default risk.

A) guaranteed security asset (GSA)

B) mortgaged backed security (MBS)

C) credit default swap (CDS)

D) collateralized debt obligation (CDO)

8) Which of the following statements concerning credit default swaps is FALSE?

A) As of year-end 2008, CDSs are completely outside of regulatory boundaries.

B) A CDS is a derivative security that may be used for hedging risk or for speculative purposes.

C) In order be a party to a CDO, at least one of either the buyer or seller must own the underlying asset.

D) CDSs allow banks to severe their links to their borrowers, thereby reducing their incentive to screen and monitor the ability of borrowers to repay.

9) ________ is the method of making investments more attractive to prospective buyers by reducing their perceived risk.

A) Subordination

B) Credit enhancement

C) Derivation

D) Deregulation

True/False

1) Mortgage loans in the U.S. are classified by risk into one of three types: prime, alt-A, and sub-prime.

2) Alt-A mortgage loans are NOT eligible for sale to GSEs such as Fannie Mae or Freddie Mac.

3) The Gramm-Leach-Bliley Financial Services Modernization Act of 1999 explicitly allowed corporate combinations of commercial banks with other types of financial institutions such as insurance companies and investment banking firms.

4) Subprime mortgages did not exceed 8% of all outstanding mortgage obligations by 2007, but by the end of 2008 they were the source of 65% of bankruptcy filings by homeowners in the United States.

5) Even though household debt as a percentage of disposable income rose rapidly in the United States in early 2000s, the rate was even greater in Britain, topping out at over 170% in 2008.

6) From 1990 through 2007, the amount of securitized loans outstanding dropped from over $25 trillion to less than $5 trillion and was a key element in the loss of market liquidity.

7) It is pretty clear after reading this chapter that securitization in and of itself is a poor financial idea.

8) Securitization may degrade credit quality because the process severs the link of lending and repayment (risk and reward) between the originator of the loan and the borrower.

9) The authors make it clear that the main source of market failure with collateralized debt obligations lay almost exclusively with the rating agencies.

10) Credit Default Swaps are highly regulated financial instruments as a result of the Commodity Futures Modernization Act of 2000.

Essay/Short Answer

1) What is a Collateralized Debt Obligation (CDO)? In your answer explain how CDOs are generally separated into one of three tranches. What types of mistakes were made by security rating agencies that contributed to the collapse of the CDO market?

5.2 Global Contagion

Multiple Choice

1) Which of the following is NOT identified by the authors as a "safe-haven" currency?

A) the euro

B) the British pound

C) the U.S. dollar

D) the Japanese yen

2) The accounting procedure whereby assets are revalued to market value basis on a daily basis is known as:

A) FASB rule 62.

B) market value accounting.

C) marked-to-market.

D) none of the above

3) The typical TED spread, the difference between the LIBOR and the interest rate swap index, is typically about ________ basis points.

A) 350

B) 180

C) 120

D) 80

4) The three stages of the global credit crisis of 2009-2009 were:

A) 1. The failure of commercial and investment financial institutions, 2. the failure of specific mortgage-backed securities, 3. a credit-induced global recession.

B) 1. The failure of specific mortgage-backed securities, 2. the failure of commercial and investment financial institutions, and 3. a credit-induced global recession.

C) 1. The failure of commercial and investment financial institutions, 2. a credit-induced global recession, 3. the failure of specific mortgage-backed securities credit-induced global recession.

D) 1. The failure of specific mortgage-backed securities, 2. a credit-induced global recession, 3. failure of commercial and investment financial institutions.

5) The British Bankers Association (BBA) estimates that LIBOR was used in the pricing of more than ________ in assets globally.

A) $100 billion

B) $360 billion

C) $360 trillion

D) $100 trillion

6) Which of the following pieces of U.S. legislation was developed and passed in response to the 2008-2009 international credit crisis?

A) Gramm-Leach-Bliley Financial Services Modernization Act

B) Dodd-Frank Wall Street Reform and Consumer Protection Act

C) Depository Institutions Deregulation and Monetary Control Act

D) The Glass-Steagall Act

True/False

1) Bear-Stearns is the largest single bankruptcy in U.S. history.

2) The international credit crisis began in full force in September 2008.

3) Near the end of the U.S. housing boom, many of the mortgages classified as Alt-A were in fact sub-prime.

4) LIBOR stand for the London Interbank Offered Rate.

5) The credit crisis was worsened by the destabilizing effects of speculators, in a variety of different institutions, betting that particular instruments or markets or securities would fail.

Essay/Short Answer

1) What is TARP? Provide an argument for why TARP was necessary and successful.

5.3 The European Debt Crisis of 2009-2012

Multiple Choice

1) Portfolio theory relies on combining assets with ________ return correlation exclusively to reduce risk.

A) highly positive

B) low

C) zero

D) none of the above

2) Future financial market regulation must include all of the following EXCEPT:

A) renewed regulatory requirements.

B) increased reporting.

C) greater transparency in pricing and valuation.

D) Regulation must include all of the above.

3) In finance, a liquid asset:

A) sells quickly.

B) sells at or near its market value.

C) both A and B

D) none of the above

4) Debt issued by the national government is called:

A) debenture debt.

B) municipal debt.

C) sovereign debt.

D) none of the above

5) The member nations of the European Union have relative freedom to set their own fiscal policies EXCEPT for which of the following?

A) government spending

B) government taxation

C) government surpluses or deficits

D) government printing of the euro currency

6) When the EU moved to a single currency with the adoption of the euro, its member states agreed to each of the following EXCEPT:

A) a single currency.

B) control of their own money supply.

C) free movement of capital in and out of their economies.

D) In fact, the member states agreed to ALL of the above.

7) As of 2011, the European countries with the highest debt/GDP ratio were, in order:

A) Greece, Italy, Portugal, and Slovenia.

B) Greece, Italy, France, and Germany.

C) Greece, Italy, Ireland, and Portugal.

D) Greece, Italy, Great Britain, and Portugal.

8) In October 2009, the new government of Greece estimated the size of the 2009 government budget deficit as 12.7% of GDP rather than the previously published:

A) 3.4%.

B) 6.7%.

C) 8.6%.

D) 10.2%.

True/False

1) The authors conclude the chapter with a specific road map for future financial regulation.

2) Baring the (hopefully temporary setback of 2008) capital is more mobile today than ever before.

3) Securitization is likely to be declared illegal in the U.S. though it may still exist elsewhere in the world.

4) Every EU member nation has the right to simply print more euros.

5) The members of the EU's eurozone (euro participants) do NOT have the ability to conduct independent monetary policy.

6) The European Financial Stability Facility (EFSF) has a mandate to safeguard financial stability in Europe by providing financial assistance to euro area Member States.

7) Ireland and Greece had the same issues lead to their financial crises in 2009. In each case, the previous government had dramatically understated the size of their federal budget deficit as a percentage of GDP.

Chapter 6 The Foreign Exchange Theory and Markets

6.1 Geographical Extent of the Foreign Exchange Market

Multiple Choice

1) Which of the following is NOT true regarding the market for foreign exchange?

A) The market provides the physical and institutional structure through which the money of one country is exchanged for another.

B) The rate of exchange is determined in the market.

C) Foreign exchange transactions are physically completed in the foreign exchange market.

D) All of the above are true.

2) A/An ________ is an agreement between a buyer and seller that a fixed amount of one currency will be delivered at a specified rate for some other currency.

A) Eurodollar transaction

B) import/export exchange

C) foreign exchange transaction

D) interbank market transaction

3) While trading in foreign exchange takes place worldwide, the major currency trading centers are located in:

A) London, New York, and Tokyo.

B) New York, Zurich, and Bahrain.

C) Paris, Frankfurt, and London.

D) Los Angeles, New York, and London.

True/False

1) Because the market for foreign exchange is worldwide, the volume of foreign exchange currency transactions is level throughout the 24-hour day.

2) Business firms in countries with exchange controls, for example, China (mainland), often must surrender foreign exchange earned from exports to the central bank at the daily fixing price.

Essay

1) Define spot, forward, and swap transactions in the foreign exchange market and give an example of how each could be used.

6.2 Functions of the Foreign Exchange Market

Multiple Choice

1) The ________ is the mechanism by which participants transfer purchasing power between countries, obtain or provide credit for international trade transactions, and minimize exposure to the risks of exchange rate changes.

A) futures market

B) federal open market

C) foreign exchange market

D) LIBOR

2) Which of the following is NOT a motivation identified by the authors as a function of the foreign exchange market?

A) the transfer of purchasing power between countries

B) obtaining or providing credit for international trade transactions

C) minimizing the risks of exchange rate changes

D) All of the above were identified as functions of the foreign exchange market.

True/False

1) Foreign exchange markets are a relatively recent phenomenon, beginning with the agreement at Bretton Woods.

6.3 Market Participants

Multiple Choice

1) The authors identify two tiers of foreign exchange markets:

A) bank and nonbank foreign exchange.

B) commercial and investment transactions.

C) interbank and client markets.

D) client and retail market.

2) It is characteristic of foreign exchange dealers to:

A) bring buyers and sellers of currencies together but never to buy and hold an inventory of currency for resale.

B) act as market makers, willing to buy and sell the currencies in which they specialize.

C) trade only with clients in the retail market and never operate in the wholesale market for foreign exchange.

D) All of the above are characteristics of foreign exchange dealers.

3) Which of the following may be participants in the foreign exchange markets?

A) bank and nonbank foreign exchange dealers

B) central banks and treasuries

C) speculators and arbitrageurs

D) all of the above

4) ________ seek to profit from trading in the market itself rather than having the foreign exchange transaction being incidental to the execution of a commercial or investment transaction.

A) Speculators and arbitrageurs

B) Foreign exchange brokers

C) Central banks

D) Treasuries

5) In the foreign exchange market, ________ seek all of their profit from exchange rate changes while ________ seek to profit from simultaneous exchange rate differences in different markets.

A) wholesalers; retailers

B) central banks; treasuries

C) speculators; arbitrageurs

D) dealers; brokers

6) Foreign exchange ________ earn a profit by a bid-ask spread on currencies they purchase and sell. Foreign exchange ________, on the other hand, earn a profit by bringing together buyers and sellers of foreign currencies and earning a commission on each sale and purchase.

A) central banks; treasuries

B) dealers; brokers

C) brokers; dealers

D) speculators; arbitrageurs

7) ________ are agents who facilitate trading between dealers without themselves becoming principals in the transaction.

A) Central banks

B) Foreign exchange brokers

C) Arbitrageurs

D) Foreign exchange dealers

True/False

1) Dealers in foreign exchange departments at large international banks act as market makers and maintain inventories of the securities in which they specialize.

2) Currency trading lacks profitability for large commercial and investment banks but is maintained as a service for corporate and institutional customers.

3) The primary motive of foreign exchange activities by most central banks is profit.

4) Banks, and a few nonbank foreign exchange dealers, operate ONLY in the interbank markets.

5) Dealers in the foreign exchange departments of large international banks often function as "market makers." Such dealers stand willing at all times to buy and sell those currencies in which they specialize and thus maintain an "inventory" position in those currencies.

6) Currency trading is a service center rather than a profit center for commercial and investment banks.

7) For individuals and firms involved in the import and export of goods and services ,using the foreign exchange market is necessary, but incidental, to their underlying commercial or investment purpose.

Essay/Short Answer

1) What are some of the reasons central banks and treasuries enter the foreign exchange markets, and in what important ways are they different from other foreign exchange participants?

6.4 Transactions in the Foreign Exchange Market

Multiple Choice

1) ________ are NOT one of the three categories reported for foreign exchange.

A) Spot transactions

B) Swap transactions

C) Strip transactions

D) Futures transactions

2) The greatest amount of foreign exchange trading takes place in the following three cities:

A) New York, London, and Tokyo.

B) New York, Singapore, and Zurich.

C) London, Frankfurt, and Paris.

D) London, Tokyo, and Zurich.

3) The four currencies that constitute about 80% of all foreign exchange trading are:

A) U.K pound, Chinese yuan, euro, and Japanese yen.

B) U.S. dollar, euro, Chinese yuan, and U.K. pound.

C) U.S. dollar, Japanese yen, euro, and U.K. pound.

D) U.S. dollar, U.K. pound, yen, and Chinese yuan.

4) A ________ transaction in the foreign exchange market requires an almost immediate delivery (typically within two days) of foreign exchange.

A) spot

B) forward

C) futures

D) none of the above

5) A ________ transaction in the foreign exchange market requires delivery of foreign exchange at some future date.

A) spot

B) forward

C) swap

D) currency

6) A forward contract to deliver British pounds for U.S. dollars could be described either as ________ or ________.

A) buying dollars forward; buying pounds forward

B) selling pounds forward; selling dollars forward

C) selling pounds forward; buying dollars forward

D) selling dollars forward; buying pounds forward

7) A common type of swap transaction in the foreign exchange market is the ________ where the dealer buys the currency in the spot market and sells the same amount back to the same bank in the forward market.

A) "forward against spot"

B) "forspot"

C) "repurchase agreement"

D) "spot against forward"

8) The ________ is a derivative forward contract that was created in the 1990s. It has the same characteristics and documentation requirements as traditional forward contracts except that they are only settled in U.S. dollars and the foreign currency involved in the transaction is not delivered.

A) nondeliverable forward

B) dollar only forward

C) virtual forward

D) internet forward

9) Which of the following is NOT true regarding nondeliverable forward (NDF) contracts?

A) NDFs are used primarily for emerging market currencies.

B) Pricing of NDFs reflects basic interest rate differentials plus an additional premium charged for dollar settlement.

C) NDFs can only be traded by central banks.

D) All of the above are true.

10) A ________ transaction in the interbank market is the simultaneous purchase and sale of a given amount of foreign exchange for two different value dates.

A) spot

B) forward-forward

C) swap

D) futures

True/False

1) A spot transaction in the interbank market for foreign exchange would typically involve a two-day delay in the actual delivery of the currencies, while such a transaction between a bank and its commercial customer would not necessarily involve a two-day wait.

2) Swap and forward transactions account for an insignificant portion of the foreign exchange market.

3) Nondeliverable Forwards were originally envisioned as a method of currency speculation, but it is now estimated that 70% of NDFs are trading for hedging purposes.

4) In general, NDF markets normally develop for country currencies having large cross-border capital movements, but still subject to convertibility restrictions.

5) NDFs are traded and settled inside the country of the subject currency, and therefore are within the control of the country's government.

6) A contract to deliver dollars for euros in six months is both "buying euros forward for dollars" and "selling dollars forward for euros."

6.5 Size of the Foreign Exchange Market

Multiple Choice

1) Daily trading volume in the foreign exchange market was about ________ per ________ in 2010.

A) $3,200 billion; month

B) $1,000 billion; month

C) $3,200 billion; day

D) $1,000 billion; day

2) The greatest volume of daily foreign exchange transactions are:

A) spot transactions.

B) forward transactions.

C) swap transactions.

D) This question is inappropriate because the volume of transactions are approximately equal across the three categories above.

3) The United Kingdom and United States together make up nearly ________ of daily currency trading.

A) 25%

B) 35%

C) 45%

D) 55%

4) The top three currency pairs traded with the U.S. dollar are:

A) U.K. pound, Chinese Yuan, Japanese yen.

B) Swiss franc, euro, Japanese yen.

C) U.K. pound, euro, Japanese yen.

D) euro, Chinese Yuan, Japanese yen.

True/False

1) As you might expect, the foreign exchange daily trading volume in in New York City is roughly twice as large as the daily trading volume in London.

2) The low level of interest rates around the globe in recent years, combined with slowing economic growth and new debt issuances, has had a dampening impact on the swap market.

3) Since the global financial crisis of 2008-2009, the Chinese renminbi (yuan) has become the most widely traded currency with the U.S. dollar surpassing the euro, yen, and pound as dollar trading pairs.

6.6 Foreign Exchange Rates and Quotations

Multiple Choice

1) A foreign exchange ________ is the price of one currency expressed in terms of another currency. A foreign exchange ________ is a willingness to buy or sell at the announced rate.

A) quote; rate

B) quote; quote

C) rate; quote

D) rate; rate

2) Most foreign exchange transactions are through the U.S. dollar. If the transaction is expressed as the foreign currency per dollar this known as ________ whereas ________ are expressed as dollars per foreign unit.

A) European terms; indirect

B) American terms; direct

C) American terms; European terms

D) European terms; American terms

3) The following is an example of an American term foreign exchange quote:

A) $20/£

B) €0.85/$

C) ¥100/€

D) none of the above

4) American and British meanings differ for the word billion. Therefore, when traders refer to an American billion, they call it a/an:

A) Kiwi.

B) Loony.

C) Uncle Sam.

D) Yard.

5) From the viewpoint of a British investor, which of the following would be a direct quote in the foreign exchange market?

A) SF2.40/£

B) $1.50/£

C) £0.55/€

D) $0.90/€

6) A/an ________ quote in the United States would be foreign units per dollar, while a/an ________ quote would be in dollars per foreign currency unit.

A) direct; direct

B) direct; indirect

C) indirect; indirect

D) indirect; direct

7) If the direct quote for a U.S. investor for British pounds is $1.43/£, then the indirect quote for the U.S. investor would be ________ and the direct quote for the British investor would be ________.

A) £0.699/$; £0.699/$

B) $0.699/£; £0.699/$

C) £1.43/£; £0.699/$

D) £0.699/$; $1.43/£

8) ________ make money on currency exchanges by the difference between the ________ price, or the price they offer to pay, and the ________ price, or the price at which they offer to sell the currency.

A) Dealers; ask; bid

B) Dealers; bid; ask

C) Brokers; ask; bid

D) Brokers; bid; ask

TABLE 6.1

Use the table to answer following question(s).

9) Refer to Table 6.1. The current spot rate of dollars per pound as quoted in a newspaper is ________ or ________.

A) £1.4484/$; $0.6904/£

B) $1.4481/£; £0.6906/$

C) $1.4484/£; £0.6904/$

D) £1.4487/$; $0.6903/£

10) Refer to Table 6.1. The one-month forward bid price for dollars as denominated in Japanese yen is:

A) -¥20.

B) -¥18.

C) ¥129.74/$.

D) ¥129.62/$.

11) Refer to Table 6.1. The ask price for the two-year swap for a British pound is:

A) $1.4250/£.

B) $1.4257/£.

C) -$230.

D) -$238.

12) Refer to Table 6.1. According to the information provided in the table, the 6-month yen is selling at a forward ________ of approximately ________ per annum. (Use the mid rates to make your calculations.)

A) discount; 2.09%

B) discount; 2.06%

C) premium; 2.09%

D) premium; 2.06%

13) Given the following exchange rates, which of the multiple-choice choices represents a potentially profitable intermarket arbitrage opportunity?

¥129.87/$

€1.1226/$

€0.00864/¥

A) ¥115.69/€

B) ¥114.96/€

C) $0.8908/€

D) $0.0077/¥

14) The U.S. dollar suddenly changes in value against the euro moving from an exchange rate of $0.8909/euro to $0.08709/€. Thus, the dollar has ________ by ________.

A) appreciated; 2.30%

B) depreciated; 2.30%

C) appreciated; 2.24%

D) depreciated; 2.24%

15) A German firm is attempting to determine the euro/pound exchange rate and has the following exchange rate information: USD/pound = $1.5509/£ and the USD/euro rate = $1.2194/€. Therefore, the euro/pound rate must be:

A) £1.2719/€.

B) €1.2719/£.

C) €0.7316/£.

D) €0.7863/£.

True/False

1) The European and American terms for foreign currency exchange are square roots of one another.

2) When the cross rate for currencies offered by two banks differs from the exchange rate offered by a third bank, a triangular arbitrage opportunity exists.

3) Most transactions in the interbank foreign exchange trading are primarily conducted via telecommunication techniques and little is conducted face-to-face.

4) A confusing "quirk" of international exchange rates occurs when calculating the percentage change in spot rates from one period to another. The percent change in the spot rate from one period to another when quoted using foreign currency terms is always greater than the percent changes quoted when using home currency terms.

#ECO 410 Week 4 Quiz – Strayer

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scrumptiouslysparklydeer-blog · 7 years ago