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Canadian Business And The Law 4th Edition by Duplessis - Test Bank
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,Chapter 1 Knowledge of Law as a Business AssetMULTIPLE CHOICE
1. Which of the following examples correctly defines business law?
a. legal responsibility for the occurrence of an event causing loss
b. rules governing commercial relationships and enforcement of rights
c. rules governing procedures involved when one person sues another
d. rules providing members of a society with established rights
ANS: B PTS: 1 DIF: Easy REF: 4
MSC: Remember
2. Which of the following describes the primary asset needed to maximize protection of entrepreneurs
and the entire business enterprise?
a. inventory tracking software
b. accounting software
c. surveillance cameras
d. knowledge of business law
ANS: D PTS: 1 DIF: Medium REF: 4
MSC: Analyze
3. Which of the following situations best exemplifies how the law protects members of society?
a. The RCMP review Robert’s e-mail without the required judicial warrant.
b. Bruce’s company car is stolen; no one is charged with the crime.
c. Evelyn is awarded compensation for wrongful dismissal.
d. Alexis is not charged for identity theft; the two-year time limit passed.
ANS: C PTS: 1 DIF: Medium REF: 4
MSC: Understand
4. A small group of entrepreneurs undertaking a business venture have agreed on the roles each will
assume in the business, but they must now determine the form of business structure for the enterprise.
Which of the following best describes what the law facilitates by offering entrepreneurs choice in
business structure?
a. choice of degree of exposure to liability for business risks
b. rules that make written agreements between parties binding
c. opportunities to maximize the protections that law extends
d. legal certainty for activities conducted in the commercial arena
ANS: A PTS: 1 DIF: Challenging REF: 4
MSC: Evaluate
Copyright © 2011 Nelson Education Limited
,5. I’mNottaSoSmart Inc. overlooked the proper registration of its patent for a unique relay component
used in its new software before release for public sale. A year later it discovered a competitor had used
the component in its just released patented software. Which of the following best describes the
consequences to the competitor for its actions?
a. Unprotected intellectual property can be used with impunity.
b. Theft of business property is a criminal offence.
c. Patent law infringements are punishable offences.
d. Losses due to theft of business property are recoverable.
ANS: A PTS: 1 DIF: Medium REF: 5
MSC: Evaluate
6. Windy Energy Inc. recovered most of its property stolen by a former employee. The employee was
placed on probation and ordered to pay restitution. Which of the following correctly identifies the type
of law that determined the employee’s punishment?
a. Employment law.
b. Business law.
c. Criminal law.
d. Contract law.
ANS: C PTS: 1 DIF: Easy REF: 5
MSC: Analyze
7. Novel Swings Inc. has a contract to begin construction of a school’s swing set on June 15th and work
is to be completed by August 1st. After weeks of wet weather, the ground was unsuitable for work to
begin in June and Novel will not meet the completion deadline. Which of the following best describes
the legal status of the contractual relationship between Novel and the school?
a. The contract is void due to wet weather.
b. The contract requires renegotiation.
c. The contract is in good standing.
d. The contract has been breached.
ANS: D PTS: 1 DIF: Medium REF: 5
MSC: Evaluate
8. Which of the following best describes the outcome of US government reluctance to regulate the
activities of its banks, financial institutions and markets?
a. US destabilization left global markets unaffected.
b. Severe destabilization of global markets and economies.
c. Subprime mortgage lending continued to grow.
d. US banks, markets and financial institutions flourished..
ANS: B PTS: 1 DIF: Medium REF: 7
MSC: Evaluate
Copyright © 2011 Nelson Education Limited
, 9. Risk managers were keen to use unregulated derivative mortgage products to shift risk off their
balance sheets. Which of the following describes the consequence of failing to regulate investment
business activities in a free-market environment?
a. Unscrupulous participants use the opportunities to act exploitatively.
b. Market participants voluntarily enforce ethical business practices.
c. Oversight by directors is a guarantee of scrupulous behaviour.
d. Market participants will cautiously push markets to expand.
ANS: A PTS: 1 DIF: Medium REF: 7
MSC: Evaluate
10. Which of the following correctly describes the purpose of contract law?
a. to ensure litigation of parties committing contractual breach
b. to prescribe principles and values for use in society
c. to determine right and wrong in the business world
d. to enforce expectations and facilitate planning
ANS: D PTS: 1 DIF: Easy REF: 8
MSC: Remember
11. After checking regulations, Meat Market Inc. refused an offer of fresh wild bison meat that could be
sold in Meat Market’s chain of butcher shops. Which of the following describes the applicable law
regulating the sale of wild meat in Canada that Meat Market Inc. considered?
a. the Wildlife Act
b. the Consumer Protection Act
c. the Criminal Code of Canada
d. the Civil Code
ANS: A PTS: 1 DIF: Challenging REF: 7|8
MSC: Evaluate
12. Mortgage Plus Inc. made outstanding profits selling derivative asset-backed investments based on
subprime mortgage products. Which of the following best describes the incentive to mortgage lenders
to bundle derivative investment products with subprime mortgage loans?
a. Mortgage lenders were able to avoid all risk of loss from borrower default.
b. Borrowers were able to escape consequences of default on payments.
c. Risk of loss to mortgage lenders resulting from borrower default was less.
d. Mortgage lenders could share risk of loss from borrower default.
ANS: A PTS: 1 DIF: Challenging REF: 7
MSC: Evaluate
Copyright © 2011 Nelson Education Limited
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