1.

Business Ethics

1. Ethics is a set of moral principles or values which is concerned with the righteousness or wrongness of human
behaviour.
(A)True (B) False

2. Ethics is the activity of examining the moral standards of a society.

(A)True (B) False

3. A .................will determine its reputation. Good business ethics are essential for the long‐term success of an
organization
(A) personal ethics (B) company’s ethics
(C) corporate ethics (D) none of these

4. ………… are ethics that refer to the moral rules and regulations governing the business world?
(A) Personal ethics (B) business ethics
(C) Environment ethics (D) None of these

5. The common denominator in both personal ethics and business values is……..
(A) responsibility (B) integrity
(C) consistency (D) None of these

6. Companies with ethical values improve their communities

(A)True (B) False

7. Harmony should not exist between Personal Ethics and Business Ethics for a better work life balance.
(A)True (B) False

8. Business ethics also known as………….

(A) personal ethics (B) corporate ethics
(C) environment ethics (D) None of these

9. Personal ethics can affect all areas of life, including family, finances and relationships.
(A) True (B) False.

10. Ethical responsibilities might exclude daily or regular tasks that contribute to the overall ethical code
(A)True (B) False.

11. What, in the context of management, best describes an amoral attitude?

(A)Being blind or indifferent to moral questions.
(B)Stating, 'Business is business,' and joining in.
(C)elying on others to report malefactors.
(D)Turning a blind eye to suspected unethical or illegal practices.

12. Business ethics are basically different from personal ethics.

(A)True
(B)False

13. Utilitarianism suggests that it is ethical to make decisions based on:

(A)Common decency
(B)What is best for most people
(C)Moral virtues
(D) None of these

14. Agency theory is the same as stakeholder theory.

(A)True
(B)False

15. A teleological approach to business ethics proposes that the guiding principle should be:
(A)Practice
(B)Power
(C)People
(D)Purpose

16. Ethical behaviour is not in the long-term interest of businesses.

(A)True
(B)False

17. Marketing communications activities can be deemed 'ethically neutral', meaning that it depends on:
(A)Stated business aims
(B)Available finance
(C)How they are carried out
(D)Legal guidelines

18. Ethical business practice requires, above all else, an active awareness and consideration of the likely long-
term consequence of any action.
(A)True
(B)False

19. Ethical behavior is a matter of:

(A)Juggling standards and business needs
(B)Acting on a considered judgement
(C)Obeying the rules
(D)None of these

20. The business organizational framework has no influence on ethical behavior.

(A)True
(B)False

1. (A) 2.(A) 3.(B) 4.(B) 5.(B)

6. (A) 7.(B) 8.(B) 9.(A) 10.(B)
11. (A) 12.(B) 13.(B) 14.(B) 15.(D)
16. (B) 17.(C) 18.(A) 19.(B) 20.(B)
2. Business Environment
1. --------is the process of analyzing the environment for the identification of factors which have
Impact on or have implication for the business.
(A)Forecasting
(B) assessment
(C) scanning
(D) None of these

2. The low income economies are sometimes referred to as ----------

(A) First world
(B) Second world
(C) Third world
(D) None of these

3. This is the Govt.’s strategy in respect of public expenditure and revenue which have a significant
Impact on business.
(A) Monetary policy
(B) Fiscal Policy
(c ) Trade policy
(D) Foreign exchange policy

4. In which year the constitution of India was amended to add, among other things, that India should
be a socialist state?
(A) 1954
B) 1976
(C) 1980
(D) 1985

5. The method used for transferring complex technology is -----------

(A) Trunkey contracts
(B) Licensing agreements
(c )Training of experts
(D) None of these

6. ---------is concerned with holding the balance between economic and social goals and between
Individual and communal goals.
(A) Corporate Management
(B) Corporate governance
(c ) Business ethics
(D) None

7. In which year the Adrian Cadbury Committee on corporate governance was appointed?
(A) 1991
(B) 1996
(c ) 1980
(D) 2000

8. CII stands for

(A) Confederation of Indian Industries
(B) Condition of Indian Industries
(c ) Classes of Indian Industries
(D) Civilians of Indian Industries

9. According to Birla Committee on Corporate governance, the non executive directors should
Comprise at least -------- per cent of the Board, if one of them is the chairman
(A)30%
(B) 20
(c ) 10
(D) 70

10. According to Birla Committee, the non executive directors should Comprise at least -------- per
cent of the Board, if the Chairman and managing director is the same person.
(A) 50%
(B) 20%
(c ) 10
(D) 20

11. --------- is concerned with the withdrawal of State from an industry or sector, partially or fully
(A) Liberalization
(B) Modernisation
(C) Privatization (D)
Globalisation.

12. In which year Govt. of India appointed the Rangarajan Committee on disinvestment in PSEs
(A) 1990,
(B) 1991
(c ) 1993
(D) 1996

13. The Govt. of India constituted a Public sector Disinvestment commission on------
(A) 15 March 1991
(B) 23 Aug 1993
(c ) 23 Sept.1993
(D) 06 May 1994

14. Which Act was replaced with the introduction of Competition Act 2002?
(A) FERA
(B) MRTP
(C) POTA
(D) None of these

15. Competition Act was enacted in the year-------

(A) June 2002
(B) Dec. 2002
(C) January 1999
(D) None of these

16. Which committee recommended the enactment of Competition Act

(A) High level Committee on competition policy and Law
(B) A Committee on Law and Order
(c ) A Central Committee for Research and Policy
(D) None of these.
17. ----------is the rate at which the central bank discounts or rediscounts the eligible bills.
(A) Credit rate
(B) Bank rate
(c ) Bill rate
(D) Deposit rate

18. Who is concerned with the auditing of the receipts and expenditure of the State and Central Govt.
(A) Accountant General
(B) Comptroller and Auditor General
( C) Reserve Bank of India
(D) None of the above.

19. Which policy is concerned with raising revenue through taxation and deciding on the level and
Pattern of expenditure?
(A) Monetary policy
(B) fiscal Policy
(C) Cash policy
(D) None of these

20. Who is responsible for presenting the Union Budget before the Parliament?
(A) Prime Minister
(B) Finance Minister
(C) RBI Governor
(D) None of these

1. (C) 2.(C) 3.(B) 4.(B) 5.(A)

6. (B) 7.(A) 8.(A) 9.(A) 10.(A)
11. (C) 12.(C) 13.(B) 14.(B) 15.(B)
16. (A) 17.(B) 18.(B) 19.(B) 20.(B)
3. Language of Business Responsibility
1. The most important aspect of power is that it:
A. Is the major focus of leadership.
B. Is necessary for goal achievement.
C. Is counterproductive.
D. Is a function of dependency.

2. Who developed the Five-Category Classification for the bases of power?

A. French and Raven
B. Blanchard and Hersey
C. Herzberg
D. Maslow

3. Bases of power refer to:

A. The elements of power.
B. What the power holder has that gives him or her power.
C. Power characteristics.
D. Whether the power position has a good foundation.

4. The statement, "That person can make things difficult for people, and you want to avoid getting him angry"
describes someone with what type of power?
A. Reward
B. Coercive
C. Referent
D. Illegitimate

5. Expert power refers to influence that derives from:

A. Position
B. Special skills or knowledge
C. Status
D. Politics

6. A power whose base is identification with a person who has desirable resources or personal traits is termed:
A. Political
B. Coercive
C. Referent
D. Legitimate

7. In which instance will dependency not be created?

A. Having something that somebody wants
B. Uncertainty of selling one's product
C. Empowering and sharing power
D. Possession of specialized knowledge

8. When a union goes on strike and management is not permitted to replace the striking employees, this is an
example of:
A. Importance
B. Empowerment
C. Scarcity
D. Nonsubstitutability
9. When managers seek benefits from a superior, they tend to use the following influence tactic:
A. Coercion
B. Persuasion
C. Bargaining
D. Friendliness

10. When managers attempt to influence superiors, the most popular influence tactic they use is:
A. Higher authority
B. Sanctions
C. Rational persuasion
D. Friendliness

11. When employees are granted total decision-making power for both job content and job context, they have
which type of employee power?

A. No discretion
B. Self-management
C. Mission defining
D. Participatory empowerment

12. Most studies confirm that the concept of ___________ is central to understanding sexual harassment.

A. Locus of control
B. Common sense
C. Politics
D. Power

13. Political behaviour is:

A. Seen only in large organizations
B. Outside one's specified job requirements
C. Not related to power
D. Part of each job requirement

14. Which one of the following factors is most likely to contribute to political behaviour?
A. Management's high need for power
B. Age of the organization
C. Authoritarian personalities
D. Organizational culture

15. Power that a person receives as a result of his or her position in the formal hierarchy of an organization is?
A. Coercive power
B. Legitimate power
C. Control power
D. Personal power

16. Impression management is:

A. The process by which individuals attempt to control the impression others form of them
B. Less likely to be used by high self- monitors
C. Perceived by people as negative
D. Not a management tool
17. What is the opposite of coercive power?
A.Information power
B.Expert power
C. Legitimate power
D. Reward power
18. Which of the following statements is false about power in organizations?
A. Power is a person's ability to get something done the way the person wants it done
B. Power is essential to leadership and management functions
C. Power typically has negative effects on organizations
D. Powerful managers and leaders get more resources for their subordinates

19. Power tactics can be defined as _____.

A. the only legitimate sources of power
B. techniques for translating power bases into specific action
C. strategies for gathering and maintain support
D. organizational structural characteristics

20. Reward power is the opposite of coercive power

A.TRUE B.FALSE

1. (D) 2.(A) 3.(B) 4.(B) 5.(B)

6. (C) 7.(C) 8.(D) 9.(B) 10.(C)
11. (B) 12.(D) 13.(B) 14.(D) 15.(B)
16. (A) 17.(D) 18.() 19.(B) 20.(A)
4. Factors Affecting Business Environment

1. Which of the following most accurately summarises the main sets of forces affecting organisations?
A. government, competitors and consumers
B. external stakeholders, management and staff
C. existing and potential competitors, suppliers, customers and substitute products or service
D. general environmental factors, competitive forces, factors internal to the organisation and the interests of
stakeholders

2 .Which of the following would NOT be a reason for management carrying out an environmental or PEST
analysis?
A. to determine environmentally responsible business practices
B. to identify all potential influences on the future of the organisation
C. to consider how organisational strategy should take account of changes in the outside world
D. to determine the external factors most likely to impact upon the organisation

3 .Which of the following would you NOT classify as a political-legal factor in the external environment.
A. Oftel’s regulatory requirements for the telecommunications industry
B. European Union directive on working hours
C. consumer attitudes to greater competition in the gas and electricity industries
D. government policy on corporate and personal income taxes

4. According to Porter, which group of forces together determine the level of competitiveness and profitability in
an industry?
A. existing and potential competitors, government regulators, buyers and suppliers
B. supplier cartels, dominant buyers and other powerful stakeholders
C. stakeholders, senior management, major competitors and customers
D. existing and potential competitors, customers and suppliers, plus the availability of substitute products or
services

5. Which of the following would NOT help a firm to improve its competitive position? developing good
relationships with its suppliers
A. building a strong brand
B. gaining sole rights to the extraction of key raw materials
C. reducing its scale of production

6. Which of the following would NOT typically characterise a highly competitive industry?
A. many firms but one has preferential access to distribution channels; substitute products/services under
development but not yet widely available
B. many firms, but none has dominant share
C. several firms in an industry, with high fixed costs of production, creating pressure to use capacity, substitute
products available
D. little scope for differentiation between firms’ products and customers can switch easily between suppliers

7. Which of the following firms is likely to operate in the least complex environment:
A. a firm specialising in selling domestic properties in the south west of England
B. a firm engaged directly in the production, distribution and sale of fashion garments
C. a firm manufacturing components for the global consumer electronics industry
D. a firm exporting fresh produce to more than 50 countries across the world

8. What is the main purpose of stakeholder mapping? [Hint]

A. to clarify the main roles of individual stakeholders in an organisation’s activities
B. to identify how the business of each stakeholder relates to that of the organisation
C. to identify major stakeholders, their expectations and their sources of power over the organisation
D. to establish how each main stakeholder fits into the organisation’s future plans

9. The most accurate definition of scenario planning is: [Hint]

A. creating visions of a desired future
B. building up pictures of possible futures to challenge existing assumptions and to test alternative strategies
C. testing financial projections using different assumptions about future sales growth
D. preparing detailed plans to cope with all possible futures

10. In large organisations, which of the following groups is least likely to have a role in environmental analysis
and strategic planning?
A. individual product or market divisions
B. strategic business units
C. corporate planning departments
D. corporate communications departm

11. CSR is
(A)The same as business ethics.
(B) A theory about ethics
(C) The integration of social and environmental concern in the daily business of the firm
(D) The title of a Govt. Committee

12. What was the focus of the Nike case?

(A) The quality of the sports foot wear
(B)The control of branding
(c ) Monitoring the conditions and rights of those involved in the supply chain
(D) The ethics of sponsor ship

13. The globally responsible leadership Initiative (GRLI) was partly founded by
(A) Enron
(B) The UN global compact
(C) The WHO
(D) Robert Maxwell

14. What is triple bottom line audit?

(A) A social, economic and environmental audit
(B) An audit of the three major financial project of a business.
(c ) An audit by the Physical Health of Employees
(D) An audit of all the Sporting resources of the enterprise.

15. What does the PPP or P3 initiative refer to?

(A) Public policy papers
(B) Public Private Partnership
(C) Private Procurement Production
(D) Personal Production Proposal
16. What does the PFI initiative refer to ?
(A)Private Finance Initiative
(B) Private Fiscal Initiative
(C) Public Financial Initiative
(D) Private Foundation Investment

17. The term ‘late industrialization’ refers to

(A) The need to delay industrialization because of its threats to the environment
(B) The problem faced by many developing countries as they seek to catch up to the
Levels of development of richer countries
(C) The belief that it is too late for many countries to industrialise.
(D) That we are how entering a post industrialized world.

18. Which of the following economists is regarded as having developed the theory of comparative
Advantage?
(A) Adam Smith
(B) David Rechardo
(c ) Joseph stiglits
(D) Amartya Sen

19 Globalisation refers to
(A). A more integrated and interdependent world
(B) Lower income world wide
(c ) Less foreign trade and investment
(D) Global warming

20. Which of the following do not facilitate globalization

(A) Improvements in communication
(B) Barriers to trade and investment
(C) immigration control
(D) Removal of control on movements of capital across borders

1. (D) 2.(A) 3.(C) 4.(D) 5.(C)

6. (A) 7.(A) 8.(C) 9.(B) 10.(D)
11. (C) 12.(C) 13.(B) 14.(A) 15.(B)
16. (A) 17.(C) 18.(B) 19.(A) 20.(B)
5. International Trade

1. A primary reason why nations conduct international trade is because:

A. Some nations prefer to produce one thing while others produce another
B. Resources are not equally distributed to all trading nations
C. Trade enhances opportunities to accumulate profits
D. Interest rates are not identical in all trading nations

2. A main advantage of specialization results from:

A. Economics of large scale production
B. The specializing country behaving as a monopoly
C. Smaller production runs resulting in lower unit costs.
D. High wages paid to foreign workers

3. International trade in goods and services is sometimes used as a substitute for all of the following
except:
A. International movements of capital.
B. International movements of labor.
C. International movements of technology
D. Domestic production of different goods and services

4. If a nation has an open economy it means that the nation:

A. Allows private ownership of capital.
B. Has flexible exchange rates
C. Has fixed exchange rates
D. Conducts trade with other countries

5. International trade forces domestic firms to become more competitive in terms of:
A. The introduction of new products
B. Product design and quality
C. Product price
D. All of the above

6. The movement to free international trade is most likely to generate short-term unemployment in
which industries:
A. Industries in which there are neither imports nor exports
B. Import-competing industries.
C. Industries that sell to domestic and foreign buyers
D. Industries that sell to only foreign buyers

7. International trade is based on the idea that:

A. Exports should exceed imports
B. Imports should exceed exports
C. Resources are more mobile internationally than are goods
D. Resources are less mobile internationally than are goods

8. Arguments for free trade are sometimes disregarded by politicians because:

A. Maximizing domestic efficiency is not considered important
B. Maximizing consumer welfare may not be a chief priority
C. There exist sound economic reasons for keeping one’s economy isolated from other
economies.
D. Economists tend to favor highly protected domestic markets

9. Which American industry has least been affected by import competition in recent years
A. Automobiles
B. Steel
C. Radios and TVs
D. Computer software

10. The largest amount of trade with the United States in recent years has been conducted by:
A. Canada
B. Germany
C. Mexico
D. United Kingdom

11. Increased foreign competition tend to

A. Intensify inflationary pressure at home
B. Induce falling output per worker-hour for domestic workers
C. Place constraints on the wages of domestic workers
D. Increase profits of domestic import-competing industries

12. For the United States, exports plus imports are about ______ of its gross national product:
A. 5 percent
B. 10 percent
C. 25 percent
D. 55 percent

13. Major trading partners of the United States including all of the following countries except:
A. Canada
B. Mexico
C. China
D. North Korea
14. Free traders maintain that an open economy is advantageous in that it provides all of the
following except:
A. Increased competition for world producers
B. A wider selection of products for consumers
C. The utilization of the most efficient production methods
D. Relatively high wages levels for all domestic workers

15. Recent pressures for protectionism in the United States have been motivated by all of the
following except:
A. U.S. firms shipping component production overseas
B. High profit levels for American corporations
C. Sluggish rates of productivity growth in the United States
D. High unemployment rates among American workers

16. International trade tends to cause welfare losses to at least some groups in a country
A. The less mobile the country’s resources
B. The more mobile the country’s resources
C. The lower the country’s initial living standard
D. The higher the country’s initial living standard
For the United States, automobiles are:
a. Imported, but not exported
b. Exported, but not imported
c. Exported and imported
d. Neither imported not exported

17. A feasible effect of international trade is that a (an):

A. Monopoly in the home market becomes an oligopoly in the world market
B. Oligopoly in the home market becomes a monopoly in the world market
C. Purely competitive firm in the home market becomes an oligopolist
D. Purely competitive firm in the home market becomes a monopolist

18. International trade in goods and services tends to:

A. Increase all domestic costs and prices
B. Keep all domestic costs and prices at the same level
C. Lessen the amount of competition facing home manufacturers
D. Increase the amount of competition facing home manufacturers

19. The real income of domestic producers and consumers can be increased by:
A. Technological progress, but not international trade
B. International trade, but not technological progress
C. Technological progress and international trade
D. Neither technological progress nor international trade

20. For the United States, commercial jetliners are:

A. Imported, but not exported
B. Exported, but not imported
C. Imported and exported
D. Neither exported nor imported

1. (B) 2.(A) 3.(D) 4.(D) 5.(D)

6. (B) 7.(D) 8.(B) 9.(D) 10.(A)
11. (C) 12.(C) 13.(D) 14.(B) 15.(A)
16. (C) 17.(A) 18.(D) 19.(C) 20.(C)
6. Business Ethics in HRM

If a very successful fast food restaurant has been ignoring customers' concerns about the small war toys and toy
guns included in their Kids Meals, then managers should begin focusing on improving the firm's
A) ethics.
B) defense.
C) profitability.
D) productivity.

2. If the owner of a shoe store seeking a price reduction gives the manager of an athletic shoe manufacturing
company a new personal computer, the shoe store owner is using which approach to influence the manufacturer's
decision making?
A) tipping
B) bribery
C) high technology
D) computer impacting

3. Actions society deems unethical are

A) always illegal.
B) socially responsible.
C) illegal but socially responsible.
D) not necessarily illegal.

4. The most important step in understanding business ethics is

A) establishing codes of ethics.
B) learning to recognize ethical issues.
C) having efficient operations.
D) implementing a strategic plan.

5. Which of the following is an argument against social responsibility?

A) Businesses created many of the problems, so they should participate in finding solutions.
B) Businesses may lose their focus on profit-making.
C) As members of society, businesses should do their fair share.
D) The survival of a healthy economy depends on businesses being socially responsible.

6. A set of formalized rules and standards that describe what a company expects of its employees is called a(n)
A) strategic plan.
B) moral philosophy.
C) guideline.
D) code of ethics.

7. Which of the following issues did your textbook identify as a category of ethical issues to study?
A) conflicts of interest
B) fairness and honesty
C) business relationships
d) all of the above

8. Social responsibility is the obligation a business has to do which of the following?

A) minimize its positive impact on society and maximize its negative impact
B) make the highest possible return for investors
C) develop total quality management
D) none of the above

9. It is the responsibility of _____ to create a work environment that helps the company achieve its objectives and
fulfill its responsibilities.
A) employees
B) individuals
C) the government
D) managers
10. A _____ exists when a person must choose whether to advance his or her own personal interests or those of
others.
A) communication problem
B) fairness and honesty issue
C) conflict of interest
D) business relationship problem

11. The Surgeon General's warning on cigarette packages about the health implications of smoking is an example
of which of the following ethical issues?
A) communications
B) relationships within a business
C) conflict of interest
D) fairness and honesty

12. Business ethics relates to

A) society's decisions.
B) an individual's or work group's decisions.
C) an organization's decisions.
D) government decisions.

13. The social responsibility of a business is important to

A) owners and investors.
B) employees.
C) governments.
D) all of the above.

14. Consumers vote against firms they view as socially irresponsible by

A) boycotting the company's products.
B) expressing dissatisfaction by protesting.
C) writing their representatives in Congress.
D) all of the above.

15. Today, most companies view social responsibility as

A) an unnecessary burden.
B) a cost of doing business.
C) a waste of time.
D) too costly to implement.

16. A supplier of pesticides has offered the manager of a farm supply store a free two-week cruise if his firm gets
a very large order from the store. The most ethical course of action for the store manager to take would be to
A) call the police.
B) accept the offer.
C) politely turn it down and discuss it with his supervisor.
D) accept it if the pesticide in question meets quality standards.

17. Which of the following statements about business ethics is true?

A) It concerns the impact of a business's activities on society.
B) It refers to principles and standards that determine acceptable behavior in the world of business.
C) It relates to an individual's values and moral standards and the resulting business decisions he or she
makes.
D) What is ethical is determined by the public, government regulators, interest groups, competitors, and
individual's personal moral values.

18. Which of the following is an argument for social responsibility?

A) It sidetracks managers from their primary objective.
B) Being socially responsible gives businesses more power.
C) Businesses may not have the necessary expertise.
D) Businesses have the financial resources to help society.

19. Which of the following management activities can help to reduce unethical behavior in business?
A) establish clear policies on unethical behavior
B) limit opportunities for unethical behavior
C) establish formal rules and procedures
D) all of the above

20. A cost of doing business most companies view social responsibility

A. true B. false

1. (A) 2.(B) 3.(D) 4.(B) 5.(B)

6. (D) 7.(D) 8.(D) 9.(D) 10.(C)
11. (A) 12.(B) 13.(D) 14.(D) 15.(B)
16. (C) 17.(B) 18.(D) 19.(D) 20.(A)
7. Corporate Governance

1. Which of the following is NOT an influence on organisational purpose:

A) Minor stakeholders
B) Business ethics
C) Corporate governance
D) The organisational mission

2. The governance framework determines:

A) Who the organisation is there to serve
B) Who the organisation is there to serve and how the purposes and priorities of the organisation should be
decided
C) The legal framework for the administration of the organisation
D) The regulatory framework in which the organisation operates

3. The main purpose of corporate governance is:

A) To separate ownership and management control of organisations
B) To maximise shareholder value
C) To separate ownership and management control of organisations and the requirement for increased
accountability to stakeholder groups.
D) To ensure that regulatory frameworks are adhered to

4 .The two-tier board of an organisation is particularly useful:

A) In ensuring that the there is a counterbalance to the power of managers
B) For managers to assert their power
C) In improving operational efficiency
D) In ensuring that employees can determine strategies for the organisation

5. In respect of mergers and take-overs the continental European model of corporate governance is particularly
useful in:
A) Avoiding a potential conflict of interest between the target company management and their shareholders
B) Avoiding a potential conflict of interest between the bidder company management and the target company
shareholders
C) Avoiding a potential conflict of interest between the target company shareholders and the bidders' shareholders
D) Avoiding a potential conflict of interest between the target company management and their key stakeholders

6. The framework for establishing good corporate governance and accountability was originally set up by the
A. Rowntree Committee
B. Thornton Committee
C. Nestlé Committee
D. Cadbury Committee

7. Which of the following is not one the underlying principles of the corporate governance Combined Code of
Practice?
A. accountability
B. openness
C. integrity
D. acceptability

8. External audit of the accounts of a limited company is required

A. because it is demanded by the company’s bankers
B. at the discretion of the shareholders
C. to detect fraud
D. by the Companies Act 2006

9. Directors’ responsibilities are unlikely to include

A. a duty of care
B. a duty to keep proper accounting records
C. a duty to propose high dividends for shareholders
D. a fiduciary duty

10. A company may become insolvent if it

A. makes a loss
B. cannot pay creditors in full after realisation of its assets
C. has negative working capital
D. cannot meet its budgeted level of profit

11. A director of a limited company may not be liable for wrongful trading if he or she
A. took every step to minimise the potential loss to creditors
B. introduced into the balance sheet an asset based on a valuation of its brands sufficient to meet any shortfall
C. brought in some expected sales from next year into the current year
D. increased the valuation of its inventories to cover any potential shortfall

12. Fraudulent trading may be

A.a criminal offence committed only by directors of a limited company
B. a civil and a criminal offence committed only by directors of a limited company
C. a civil and a criminal offence committed by any employee
D. a civil offence committed by any employee

13. Disqualification of directors may result from breaches under the

A. Companies Act 2006 and Insolvency Act 1986
B. Financial Services Act 1986
C. Sale of Goods Act 1979
D. Health and Safety at Work Act 1974

14. Directors may not be disqualified for

A. paying inadequate attention to the company finances
B. persistent breaches of company legislation
C. being convicted of drunken driving
D. continuing to trade when the company is insolvent

15. Which of the following actions will not help directors to protect themselves from non-compliance with their
obligations and responsibilities?
A. ensuring that regular management accounts are prepared by the company
B. keeping themselves fully informed about company affairs
C. seeking professional help
D. including a disclaimer clause in their service contracts

16. Trade Related Investment Measures (TRIMS) doesn’t apply for

A) Measures that affect trade in goods.
B) Measures that lead to restrictions in quantities.
C) Discouraging measures that limit a company’s imports.
D) discouraging measures that limit a company’s exports.

17. General agreement on trade in services will not be applicable to

A) Services supplied from one country to another – cross border supply
B) Transaction of goods across the border – Export Import
C) Individuals traveling from own country to supply services in another – presence of natural persons.
D) Consumers/firms making use of a service in another country – consumption abroad..

18. As a part of WTO guidelines, Agreement on Agriculture (AOA) doesn’t consider

A) Direct payments to farmers are permitted.
B) Indirect assistance and support to farmers including R & D support by govt. are not permitted.
C) Domestic policies which directly effect on production and trade have to be cut back.
D) Least developed countries do not need to make any cuts.

19. Agreement on Textile and clothing was set out as a transitional process on 01 Jan 1995 for the ultimate
removal of quotas by WTO by 01 Jan 2007.
A. true B. False

20. The first ever set of multilateral, legally enforceable rules covering international trade in services is the
General Agreement on Trade in services (GATS).
A. True B. false

1. (D) 2.(B) 3.(C) 4.(A) 5.(A)

6. (D) 7.(D) 8.(D) 9.(C) 10.(B)
11. (A) 12.(C) 13.(A) 14.(C) 15.(D)
16. (B) 17.(B) 18.(B) 19.(B) 20.(A)
8. Managing Ethical Approaches

1. Which of the following statements about a stakeholder is true?

(A) Has made a personal financial investment in the business.
(B) Seeks to influence a key aspect of operations.
(C) Has a meaningful stake in the organization’s performance.
(D) Will be found in the organization’s environment.

2. Egoism is an ethical theory that treats self-interest as the foundation of morality.

(A) True
(B) False

3. What, in the context of management, best describes an amoral attitude?

(A) Stating, 'Business is business,' and joining in.
(B) Being blind or indifferent to moral questions.
(C) Relying on others to report malefactors.
(D) Turning a blind eye to suspected unethical or illegal practices.

4. Management ethics is resources provided by philosophical ethics and move on to consider the challenges
inherent in working in a competitive business environment.
(A) True
(B) False

5. "Shareholder wealth" in a firm is represented by:

(A) The number of people employed in the firm.
(B) The book value of the firm's assets less the book value of its liabilities.
(C) The amount of salary paid to its employees.
(D) The market price per share of the firm's common stock.

6. Ethics is nothing but art of directing the actions of man so as to bring about the lowest possible happiness to all
those who are concerned with these actions.
(A) True
(B) False

7. Which of the following is not usually the objective of a code of ethics?

(A) To create an ethical workplace
(B) To evaluate the ethical components of the proposed actions of the employees
(C) To improve the public image of the company
(D) To enhance the profits of the business continuously

8. Authorities commonly not agree that managerial skills are essential if any organization, corporate or religious,
is to demonstrate superior performance.
(A) True
(B) False

9. Which of the following factors shapes the ethical behaviour of the members of an organization?
(A) The supervisor’s behaviour
(B) organizational culture
(C) Code of ethics
(D) All of the these
10. The stockholder theory holds that managers are obligated to pursue the (legal) directions of the stockholders.
(A) True
(B) False

11. The long-run objective of financial management is to:

A. maximize earnings per share.
B. maximize the value of the firm's common stock.
C. maximize return on investment.
D. maximize market share.

12. What are the earnings per share (EPS) for a company that earned $100,000 last year in after-tax profits, has
200,000 common shares outstanding and $1.2 million in retained earning at the year end?
A. $100,000
B. $6.00
C. $0.50
D. $6.50

13. A(n) would be an example of a principal, while a(n) would be an example of an agent.
A. shareholder; manager
B. manager; owner
C. accountant; bondholder
D. shareholder; bondholder

14. The market price of a share of common stock is determined by:

A. the board of directors of the firm.
B. the stock exchange on which the stock is listed.
C. the president of the company.
D. individuals buying and selling the stock.

15. The focal point of financial management in a firm is:

A. the number and types of products or services provided by the firm.
B. the minimization of the amount of taxes paid by the firm.
C. the creation of value for shareholders.
D. the dollars profits earned by the firm.

16. The decision function of financial management can be broken down into the decisions.
A. financing and investment
B. investment, financing, and asset management
C. financing and dividend
D. capital budgeting, cash management, and credit management

17. The controller's responsibilities are primarily in nature, while the treasurer's responsibilities are primarily
related to .
A. operational; financial management
B. financial management; accounting
C. accounting; financial management
D. financial management; operations

18. In the US, the has been given the power to adopt auditing, quality control, ethics, and disclosure
standards for public companies and their auditors as well as investigate and discipline those involved.
A. American Institute of Certified Public Accountants (AICPA)
B. Financial Accounting Standards Board (FASB)
C. Public Company Accounting Oversight Board (PCAOB)
D. Securities and Exchange Commission (SEC)

19. A company's is (are) potentially the most effective instrument of good corporate governance.
A. common stock shareholders
B. board of directors
C. top executive officers
D. None of These

20. The Sarbanes-Oxley Act of 2002 (SOX) was largely a response to:
A. a series of corporate scandals involving Enron, WorldCom, Global Crossing, Tyco and numerous others.
B. a dramatic rise in the US trade deficit.
C. charges of excessive compensation to top corporate executives.
D. rising complaints by investors and security analysts over the financial accounting for stock options.

1. (C) 2.(A) 3.(B) 4.(A) 5.(A)

6. (B) 7.(D) 8.(B) 9.(D) 10.(A)
11. (B) 12.(C) 13.(A) 14.(D) 15.(C)
16. (B) 17.(C) 18.(C) 19.(B) 20.(A)
9. Strategies for Handling Ethical Dilemmas

1. Which of the following was advanced as an argument for social responsibility?

A. The purpose of a business includes social responsibility dimensions.
B. Most organisations have social objectives implied in their legal purposes.
C. Since society grants rights and privileges to organisations, these should be exercised responsibly.
D. When social consequences are involved, managers are quite capable of making the right decisions..

2. Social responsibility is the obligation of managers to act in ways that benefit the interests of society as a whole.
A. True B. False

3. Which of the following statements about a stakeholder is true?

Seeks to influence a key aspect of operations.
A. Has made a personal financial investment in the business.
B. Will be found in the organisation's environment.
C. May be unrecognised by the organisation.
D. Has a meaningful stake in the organisation's performance.

4. Which of the following was not suggested as a potential benefit for the socially responsible organisation?
A. Swaying public opinion
B. Creating markets for environmentally friendly process technologies
C. Attracting ethical investors
D. Being more robust in times of recession

5. Which of the following statements best describes ethics?

A. Ethics considers how someone chooses among alternative courses of action.

B. Ethics is about values and principles.
C. Each of the above covers part of the definition.
D. None of the above is true.
6. We suggested that the domain of ethics lies between two other ill-defined and changing domains. What are
they?
A. Coercion and personal freedom
B. Fixed principles and relative values
C. Free choice and law
D. Altruism and hedonism
7. 'The moral course is the one that offers the greatest good to the greatest number of people.'
Which approach to ethics is this?
A. Unitarian
B. Aristotelian
C. Deontological
D. Utilitarian

8. What is whistle blowing?

A. Warning colleagues of threats from unethical dealers, investors and the like
B. Revealing unethical behaviour to superiors or outsiders
C. Calling for an end to unethical practice in an organisation
D. Announcing a high standard of ethical behaviour to persuade outsiders of the benefits of dealing with an
organisation

9. What, in the context of management, best describes an amoral attitude?

A. Turning a blind eye to suspected unethical or illegal practices.
B. Relying on others to report malefactors.
C. Stating, 'Business is business,' and joining in.
D. Being blind or indifferent to moral questions.
10. In economics the central problem is:
A. money.
B. consumption.
C. scarcity.
D. allocation.
production.

11. Indicate below what is NOT a factor of production.

A. A bank loan.
B. Land.
C. Capital.
D. Labour.

12. Macroeconomics deals with:

A. economic aggregates.
B. the behaviour of firms.
C. the activities of individual units.
D. the behaviour of the electronics industry.

13. Microeconomics is not concerned with the behaviour of:

A. industries.
B. firms.
C. aggregate demand.
D. consumers.

14. The study of inflation is part of :

A. microeconomics.
B. macroeconomics.
C. descriptive economics.
D. normative economics.
15. Aggregate supply is the total amount:
A. produced by the government.
B. of goods and services produced in an economy.
C. of labour supplied by all households.
D. of products produced by a given industry.

16. The total demand for goods and services in an economy is known as:
A. national demand.
B. aggregate demand.
C. economy-wide demand.
D. gross national product.

17. Inflation is:

A. a decrease in the overall price level.
B. a decrease in the overall level of economic activity.
C. an increase in the overall price level.
D. an increase in the overall level of economic activity.
18. A recession is:
A. a period during which aggregate output declines.
B. a period of declining prices.
C. a period of declining unemployment.
D. a period of very rapidly declining prices.

19. Unemployment means that:

A. there are some people who will not work at the going wage rate.
B. people are not willing to work at the going wage rate.
C. there is excess demand in the labour market.
D. at the going wage rate, there are people who want to work but cannot find work.

20. If marginal benefit is greater than marginal cost, a rational choice involves:
A. more or less, depending on the benefits of other activities.
B. no more of the activity.
C. less of the activity.
D. more of the activity

1. (C) 2.(B) 3.(D) 4.(D) 5.(C)

6. (C) 7.(D) 8.(B) 9.(D) 10.(C)
11. (A) 12.(A) 13.(C) 14.(B) 15.(B)
16. (B) 17.(C) 18.(A) 19.(D) 20.(D)
10. Code of Ethics

1. Business ethics are basically different from personal ethics.

A. True B. False
2. Utilitarianism suggests that it is ethical to make decisions based on:
A. What is best for most people
B. Moral virtues
C. Common decency
D. none of these
3. Agency theory is the same as stakeholder theory.
A. True B. False

4. A teleological approach to business ethics proposes that the guiding principle should be:
A. Purpose
B. Power
C. People
D. Practice

5. Which of the following are not major schools of thought?

A. Duties
B. Consequences
C. Roles
D. none of these

6. Sternberg claims that taking a bribe is:

A. A violation of common decency
B. A violation of distributive justice
C. A violation of human rights
D. A violation of an individual's right to privacy

7. Ethical behaviour is not in the long-term interest of businesses.

A. True B. False

8. Vance Packard's book was entitled:

A. The Hidden Protectors
B. The Hidden Persuaders
C. The Hidden Provocateurs
D. The Hidden Enforcers

9. Extortion is an attempt to buy:

A. Goods and services quickly
B. Influence
C. Goodwill
D. none of these

10. Distributive justice refers to:

A. Rewards allocated regardless of contribution
B. Rewards allocated to those who shout loudest
C. Rewards allocated to those who cannot help themselves
D. Rewards allocated by level of contribution
11. Marketing communications activities can be deemed 'ethically neutral', meaning that it depends on:
A. Available finance
B. Legal guidelines
C. Stated business aims
D. How they are carried out

12. 'Sugging' is the unacceptable practice of:

A. Bribing organisational buyers
B. Giving worthless guarantees
C. Selling under the guise of research
D. Intrusive telesales calls

13. Ethical business practice requires, above all else, an active awareness and consideration of the likely long-
term consequence of any action.
A. True B. False

14. Research suggests that marketing communications designed to shock are:

A. Always the most effective
B. Possibly counter-productive
C. Probably the least effective
D. none of these

15. The business organisational framework has no influence on ethical behaviour.

A. True
B. False

16. Research suggests that unethical behaviour is viewed most seriously by stakeholders if:
A. Unfavourable reports appear in the media
B. It has a long-term, negative impact on organisational effectiveness
C. standards agency criticises the organization
D. Some customers are upset

17. Ethical behaviour is a matter of:

A. Acting on a considered judgement
B. Juggling standards and business needs
C obeying the rules
D. none of these

18. Research shows that a majority of marketers:

A. Pretend that ethics and social responsibility are important
B. Believe that ethics and social responsibility are important
C. Do not care about ethics and social responsibility
D. none of these

19. There is no intrinsic difference between lying, misrepresentation and puffery in advertising.
a. True b. False

20. Misrepresentation can occur when a salesperson makes incorrect statements.

A True B. False
1. (B) 2.(A) 3.(B) 4.(A) 5.(C)
6. (B) 7.(B) 8.(B) 9.(B) 10.(D)
11. (D) 12.(C) 13.(A) 14.(B) 15.(B)
16. (B) 17.(A) 18.(A) 19.(B) 20.(A)