WCC Exam 3 Study Guide 80 Questions with Verified Answers,100% CORRECT, Exams of Business Economics

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WCC Exam 3 Study Guide 80 Questions with Verified

Answers

corporation - CORRECT ANSWER a legal structure allowing individuals to pool resources (capital, labor, etc.) to generate profit Characteristics of a corporation - CORRECT ANSWER They act as a single entity separate from the persons who run/own them; and they can own property. Why are corporations "well positioned" to engage in illegal and/or unethical activities? - CORRECT ANSWER Disproportionate influence on government/politicians {the power elite} How long have corporations been in existence? - CORRECT ANSWER since roman times How are corporations held liable for criminal activity? - CORRECT ANSWER Corporate agents' actions may be imputed to the corporation itself; To be a corporate crime, actions should be (1) on behalf of the corporation, (2) to the benefit of the corporation, or (3) within the scope of authority granted granted to the agent by the corporation three primary ways by which corporate crime might be considered violent crime. - CORRECT ANSWER Violence against public (unsafe environmental practices); violence against consumers (unsafe products); violence against workers (unsafe working conditions) How are work-related injuries and diseases associated with premature death? - CORRECT ANSWER major cause, accurate data are hard to estimate trust/monopoly - CORRECT ANSWER The exclusive possession or control of the supply or trade in a commodity or service.

two primary ways by which corporations try to eliminate competition - CORRECT ANSWER 1. reduce competitors sales (predatory pricing and pressuring others not to work with competitors)

2. increase competitors cost (predatory arrangements with suppliers, lending institution pressure, sabotage) major anti-trust legislation in the U.S. - CORRECT ANSWER Sherman anti-trust act, Clayton Anti-Trust Act, Federal Trade Commission Act Clayton Anti-Trust Act - CORRECT ANSWER specific activities that can be regulated but exempts labor (unions, sports teams); Sherman anti-trust act - CORRECT ANSWER 1st proconsumer legislation that prohibits business activities that reduce competition in the marketplace; Federal Trade Commission Act - CORRECT ANSWER established federal trade commission with focus on unfair competition primary forms of abuse-of-power associated with corporate crime - CORRECT ANSWER - corruption of political process (bribery, economic interests outweigh public safety)

• corporate crimes against citizens and taxpayers (defrauding the government)
• corporate tax evasion primary purpose of anti-trust laws - CORRECT ANSWER To promote and protect competition horizontal price fixing - CORRECT ANSWER competition businesses conspire to charge prices at a similar level vertical price fixing - CORRECT ANSWER parties from different levels of production and distribution chain agree to set prices price discrimination - CORRECT ANSWER refers to practices where different prices are charged simply to restrict competition between competitors

When is price discrimination illegal? - CORRECT ANSWER Price discrimination is common and only illegal when the firm is using it to lessen or eliminate competition. what is the major problem with price discrimination? - CORRECT ANSWER difficult to determine whether different prices are being offered to limit competition or price differences are just a natural part of business Which type of corporate wrongdoing is most evident in the immediate aftermath of natural disasters like hurricanes or tornadoes? - CORRECT ANSWER Price gouging two types of unfair labor practices - CORRECT ANSWER Exploitation and discrimination OSHA - CORRECT ANSWER Occupational Safety and Health Administration; situated in the department of labor What was OSHA created to address? - CORRECT ANSWER federal agency charged with addressing health and safety issues in businesses Per Figure 10.2, what is the most frequent cause of workplace fatalities in 2018? - CORRECT ANSWER Transportation incidents Beyond the physical costs, what are other significant costs of workplace injuries and illnesses? - CORRECT ANSWER (1) settlement costs to victims and family members, (2) negative publicity, (3) increases in insurance premiums, (4) higher worker compensation rates, and (5) increased attention from government agencies what are the major categories of types of products that have been linked to serious harm to consumers? - CORRECT ANSWER 1. harmful toys (children's products)

2. certain automobiles
3. types of food
4. specific types of construction material
5. recalled goods from china

In the section on food safety, what illegal activities did the Peanut Butter Corporation of America engage in 2008 and 2009? - CORRECT ANSWER knew peanut butter contaminated was with salmonella, but engaged in lab shopping to find another lab that would approve the peanut butter before distribution -distributed peanut butter before receiving approval from secondary lab What are the four major patterns that characterize corporate white-collar crimes?

• CORRECT ANSWER 1. benefits of the corporate crime

2. the complexity of intent
3. the breadth of victimization
4. problems responding to corporate crime When corporate crimes are addressed in the media, what tends to be the focus of media, journalists, and the public? - CORRECT ANSWER the media tended to focus narrowly on the offense and assign blame on the individual level. What legislation did the Savings and Loan Collapse of 1980 produce? - CORRECT ANSWER Financial Institutions reform, recovery, and enforcement act (1989) What were the three major financial crises that affected the U.S. since the 1980s?

• CORRECT ANSWER 1.) The Savings and Loan Collapse (1980) 2.) The corporate Fraud Scandals (90s) 3.) Financial meltdown of 2008 What legislation did The corporate Fraud Scandals (late 1990s) produce - CORRECT ANSWER Sarbane-Oxley Act (2002) What legislation did the Financial meltdown of 2008 (starting in housing market & spreading to wall street) produce - CORRECT ANSWER Dodd-Frank wall street reform and consumer protection act (2010) Know the three common factors associated with "false profits" in financial firms - CORRECT ANSWER 1.) financial engineering, rather than improve product 2.) gaming markets, rather than improve competitiveness 3.) cover up failure and appear profitable, rather ride out highs and lows of market

major players in economic/financial systems - CORRECT ANSWER banks, investment firms, and exchange markets like securities and commodities What is the typical classification of crimes in the economic system? - CORRECT ANSWER investment fraud What are the two levels of victimization in securities frauds? - CORRECT ANSWER securities fraud can cause injury to individual victims, and securities fraud also threatens the integrity of the securities market securities - CORRECT ANSWER stocks (ownership of in a company) stocks - CORRECT ANSWER shares of stock of a particular company as held by an individual or group as an investment bonds - CORRECT ANSWER a form of long-term debt in which the issuing corporation promises to pay the principal amount at a specific date mutual funds - CORRECT ANSWER an investment program funded by shareholders that trades in diversified holdings and is professionally managed. How are statutes designed to address securities fraud? - CORRECT ANSWER the laws provide remedies for damages caused by "material misstatements or omissions of information to potential investors" What were the key pieces of legislation passed to address securities violations and what did each do? - CORRECT ANSWER The Securities Act (1933) requires full disclosure of information to potential investors; and The Securities Exchange Act (1935) regulates trading in securities market and created the Securities & Exchange Commission (SEC) insider trading - CORRECT ANSWER the purchase or sale of securities bases on material, no-public information key elements of insider trading - CORRECT ANSWER

operating ideas behind ponzi schemes - CORRECT ANSWER built on promise of high returns on investments with an investment manger; dividends or profits are paid out from investors own money or from new What were the key elements of Madoff's ponzi scheme that allowed him to stay operational for nearly 17 years? - CORRECT ANSWER 1.) secrecy (not officially being licensed 2.) feeder funds (don't charge fees for money sent to Madoff's management fund); 3.) Maintained legitimate marketing company to supply cover to trading activities; 4.) Fake investment reports-- mailed out rather than electronic Madoff was first suspected of frontrunning, which is? - CORRECT ANSWER broker takes advantage of the special knowledge about a pending custom order and trades on his or her own account before executing that order financialization - CORRECT ANSWER the trend toward accumulation in which profits accure primarily through financial channels rather than through trade & commodity production; meaning you make money by defining and redefining what transactions are about what factors contribute to increases in opportunities and motivations for financial crimes? - CORRECT ANSWER 1.) Growth of financial services industry (now more than 40% of economy) 2.) Economic dependence on financial services-- more engagement of investment banks into non-financial areas 3.) Financial engineering-- dominant focus is on share price 4.) Explosion of compensation for finance workers Neutralization theory allow otherwise conventional people to unconventional things - CORRECT ANSWER Neutralization theory allow otherwise conventional people to unconventional things bid rigging - CORRECT ANSWER illegal conspiracies in which prices or rates of goods and/or services are manipulated or rigged to increase profits

money laundering - CORRECT ANSWER the concealment of the origins of illegally obtained money, typically by means of transfers involving foreign banks or legitimate businesses three themes that emerge out of research concerning an organizational culture conducive to financial crimes - CORRECT ANSWER 1.) Social darwinism (cultural attitude of "I'll be gone, you'll be gone gone" -- take what you can 2.) Financial crime is fun (appears to be something of a party atmosphere --its all a game) 3.) Moral indifference (research suggest up to 1/3 of workers in financial industry would cheat for $10 million if sure they wouldn't get caught Why are computer crimes particularly challenging to researchers and to law enforcement? - CORRECT ANSWER 1.) The crimes are hard to uncover (victims often unaware) 2.) Victims often do not report the crimes (my wish to avoid attendant negative publicity) 3.) Increases in computer-use volume & technology require ever-more human resources and training What was Mark Zuckerburg's first alleged white-collar crime when he started Facebook? - CORRECT ANSWER copyright infringement (or theft of computer codes) What is the difference between securities fraud and commodities fraud? - CORRECT ANSWER Securities fraud refers to fraudulent activities related to stocks, bonds, and mutual funds; Commodities fraud is defined as the "fraudulent sale of commodities investments". Commodities are raw materials such as natural gas, oil, gold, agricultural products, and other tangible products that are sold in bulk form. pinging - CORRECT ANSWER Commodities fraud is defined as the "fraudulent sale of commodities investments" (FBI, 2009). Commodities are raw materials such as natural gas, oil, gold, agricultural products, and other tangible products that are sold in bulk form.

spoofing - CORRECT ANSWER using computerized platforms to submit orders at high prices with the sole purpose of driving up the cost and quickly canceling the orders What does the trend line look like for suspected cases of insider trading according to FINCEN? - CORRECT ANSWER Suspected cases of insider trading are increasing every year What is futures trading and what kinds of fraud are reflected in futures trading fraud? And who is it that is most likely to benefit from the fraudulent actions? - CORRECT ANSWER refers to fraud occurring in the trading of futures contracts and options on the futures trading market Prearranged trading, front running, and bucketing; most likely to benefit the broker pyramid schemes - CORRECT ANSWER recruit individuals by promising them profits from getting others to invest, whereas Ponzi schemes do not require participants to recruit investors. In pyramid schemes, the participants' interactions are generally limited to interactions with the investor who got them to join the scheme ponzi schemes - CORRECT ANSWER an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. Similarities and differences between pyramid and ponzi schemes - CORRECT ANSWER The source of payments in both schemes is from new participants— those in pyramid schemes know this, but those in Ponzi schemes do not What are some of the "red flag" warnings for potential Ponzi schemes? - CORRECT ANSWER Complicated trading strategies Irregular investment payments Unique customer statements Delays in withdrawals and transfers Promises of high investment returns with little or no risk Overly consistent returns

Unregistered investments Unlicensed sellers Secretive strategies Issues with paperwork Difficulty receiving payments (SEC, 2009) how do students engage in student loan fraud? - CORRECT ANSWER 1) lying about intent to take classes, (2) taking out loans with no intent to pay them back, (3) lying about qualifications/income, (3) schemes or fraud rings designed to enroll students in college, (4) identity fraud to enhance qualifications, and (5) schemes targeting students with fee-based financial aid seminars. What forms does research misconduct take? - CORRECT ANSWER Fabrication and falsification of data; Plagiarism five key elements to a typical research code of ethics - CORRECT ANSWER Ethical treatment of human subjects and protection from harm. Honesty/integrity in experiments and results. Accurate reporting of research and results. Granting others access to data and methods to allow reproduction of testing. Proper acknowledgement of contributions of others. About how much scholarly research is believed to contain some fraudulent parts in some important way? - CORRECT ANSWER Estimated range from about 1-14% of scholarly research is fraudulent in one or more ways. plagiarism - CORRECT ANSWER the practice of taking someone else's work and passing it as your own. Professors may publish a students work as their own. What was the problem with the research linking the MMR vaccine and autism? - CORRECT ANSWER What are "pecuniary-oriented" offenses and what forms might they take? - CORRECT ANSWER Money related ultimately done by professors, such as embezzlement, textbook fraud, double billing, and engaging in unapproved outside work.

What does the "politicization of science" refer to? What are examples of that? - CORRECT ANSWER Manipulating science for political purposes. What is sexual misconduct and what are the three forms it might take? - CORRECT ANSWER Unwelcome sexual advances, requests for sexual favors and/or verbal or physical conduct of sex nature. The three forms are: Submission to such conduct is explicitly or implicitly, a term of condition for educational experience; submission to or rejecting of such conduct is used as the basis for educational decisions affecting individuals. Why is it difficult to assess or estimate how often research misconduct occurs? - CORRECT ANSWER few researchers have actually empirically assessed research misconduct loose authorship - CORRECT ANSWER some authors are included on the manuscript who should not be According to charts in Figures 7.1A and 7.1B, most research misconduct findings have been for what type of misconduct? - CORRECT ANSWER plagiarism What are the two patterns that are common in research misconduct cases? In what ways are the patterns similar to other white-collar offenses and in what ways are they different from other forms? - CORRECT ANSWER as in other white- collar crime cases, many of those who commit research misconduct commit various forms of misconduct on multiple occasions. If researchers engage in one type of misconduct, like fudging data—it is likely that they have engaged in others; A second pattern in these cases—and one that distinguishes it from many other white-collar crimes—is that in most cases, the offenders acted alone. This is part of the process of committing research misconduct. Whereas certain types of health care fraud, for example, might require multiple participants to carry out the fraud, for research misconduct, a rogue professor aiming to achieve a certain end is able to accomplish this task without the help of others. ghostwriting - CORRECT ANSWER Ghostwriting refers to situations in which professors or researchers have their work written by someone else, but the professor's name appears on the work