QUESTION 16 What distinguishes insider trading from other types of trading? The

Question

QUESTION 16

What distinguishes insider trading from other types of trading?

The trading is based on non-public information

The trading is completed by professionals

The trading is profitable for all involved

The trading involves stocks, bonds, and securities

2 points   

QUESTION 17

Friedman argued that social spending by corporations is a form of taxation on _________.

the public

the employees

the shareholders

the board of directors

2 points   

QUESTION 18

What is the key similarity between the exploitation and redistribution rationales for a minimum wage?

They are both based on morality.

They both show that a minimum wage effectively promotes justice.

They both focus on the possibility of coercion.

They are both economic arguments.

2 points   

QUESTION 19

According to the “classical view,” companies ________.

have a responsibility to their environment

can promote CSR without sacrificing profitability

are not essentially different from other types of organizations

exist for reasons other than promoting social responsibility

2 points   

QUESTION 20

An effective corporate ethics program should include.

standards that have been communicated to all levels

oversight given to a few individuals

training in all of the relevant laws

reporting of all procedures to the public

2 points   

QUESTION 21

Luis, a manager for a local branch of a multinational corporation, agrees to hire an official’s son for an assistant manager position in order to gain approval of a necessary permit. This situation is an example of:

Nepotism

Entrepreneurship

Bribery

Capital flight

3 points   

QUESTION 22

Kristen is injured in a car accident when the brakes fail on her car. She sues the car manufacturer, not the brake manufacturer, and the courts rule in her favor. This situation is an example of which theory of product safety?

Contractual

Strict liability

Due care

Kantian

3 points   

QUESTION 23

According to Friedman, a corporation is only obligated to serve the interests of one group. Who of the following best fits that description:

Gina, a farmer who supplies ingredients to the corporation.

Sam, a customer who buys the corporation’s products.

Luis, a documented immigrant who works for the corporation.

Martin, an investor who owns 500 shares of a corporation.

3 points   

QUESTION 24

Trina’s Ts is a multinational corporation that has subsidiaries throughout the world. One subsidiary sells cotton to another subsidiary, both located in a developing nation. What is the ethical concern with this example of transfer pricing?

Consumer protection

Employment practices

Tax avoidance

Environmental preservation

3 points   

QUESTION 25

Amanda is a shareholder for ProBrakes International. How does she and other shareholders ensure that the managers of ProBrakes act with the goal of turning a maximum profit?

The shareholders help with publicity and marketing to ensure profit.

The shareholders control manger’s incentives through the board of directors.

The shareholders help develop public policies that support profitability.

The shareholders are given incentives when the company does turn a profit.

The trading is based on non-public information

The trading is completed by professionals

The trading is profitable for all involved

The trading involves stocks, bonds, and securities

Explanation / Answer

16. Answer- a. The trading is based on non-public information. Insider trading is the trading of a public company's stock or other securities by individuals with access to nonpublic information about the company.

17. Answer- c. The Shareholders. Milton Friedman argued that CSR fails to serve the interests of company’s stockholders. Friedman supported socially responsible corporate decisions as long as they further a company’s self-interest.

18. Answer- a. They are both based on morality. Minimum wage has always been a moral issue. Exploiting people by not paying them what they deserve is a moral issue and the same happens in redistribution rationales as well.

19. Answer- d. exist for reasons other than promoting social responsibility. According to the classical view, companies Maximize value to shareholders.

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