Strayer University LEG 500 Exam 1 (pdf) | 2026/2027 | Law Ethics
Corp Gov | Business Law
1. Which of the following best defines ethics?
A) A set of rules for behavior that is legally enforceable
B) The study of how people ought to act, grounded in moral principles
C) A system of laws created by government to regulate business conduct
D) The principles of efficiency and profit maximization in business
Correct Answer: The study of how people ought to act, grounded in moral
principles
Rationale: Ethics is the study of how people ought to act, grounded in moral
principles and values. It differs from law, which is a system of rules
enforceable by government. Ethics often guides behavior beyond what is
legally required, focusing on what is right, just, and fair in both personal and
professional contexts.
2. Which statement best describes the relationship between law and ethics?
A) Law and ethics are identical concepts
B) Law is the minimum standard of conduct; ethics may require more
C) Ethics is always stricter than the law
D) Ethics has no relationship to the law
Correct Answer: Law is the minimum standard of conduct; ethics may require
more
Rationale: Law establishes the minimum standards of behavior that society
will tolerate, while ethics often demands a higher standard of conduct. An
action can be legal but still unethical, and ethical behavior sometimes
,exceeds legal requirements. Understanding both is essential for responsible
business conduct.
3. The stakeholder theory of corporate social responsibility holds that:
A) Only shareholders have a legitimate interest in corporate decisions
B) All individuals and groups affected by corporate decisions have a
legitimate interest
C) Only employees have a legitimate interest in corporate decisions
D) Only customers have a legitimate interest in corporate decisions
Correct Answer: All individuals and groups affected by corporate decisions
have a legitimate interest
Rationale: Stakeholder theory asserts that corporations have obligations to
all parties affected by their decisions, not just shareholders. This includes
employees, customers, suppliers, communities, and the environment. This
broader view of corporate responsibility has become increasingly influential
in modern business ethics.
4. Which of the following is a key element of effective corporate governance?
A) Maximizing short-term profits at any cost
B) Ensuring accountability and transparency in decision-making
C) Minimizing employee involvement in corporate decisions
D) Avoiding all government regulations
Correct Answer: Ensuring accountability and transparency in decision-making
Rationale: Effective corporate governance involves creating structures and
processes that ensure accountability, transparency, fairness, and
responsibility in corporate decision-making. It includes the roles of boards of
,directors, executive compensation, shareholder rights, and transparency in
financial reporting.
5. The Sarbanes-Oxley Act of 2002 was primarily enacted in response to:
A) The Great Depression
B) Major corporate accounting scandals such as Enron and WorldCom
C) The 2008 financial crisis
D) The COVID-19 pandemic
Correct Answer: Major corporate accounting scandals such as Enron and
WorldCom
Rationale: The Sarbanes-Oxley Act (SOX) was enacted in response to high-
profile corporate accounting scandals, including Enron and WorldCom. SOX
established new or enhanced standards for all U.S. public company boards,
management, and public accounting firms, including requirements for CEO
and CFO certification of financial statements and increased penalties for
fraud.
6. The Employment-at-Will Doctrine holds that:
A) Employees can only be terminated for cause
B) Either party may terminate the employment relationship at any time for
any reason
C) Employers cannot terminate employees without providing advance notice
D) Employees cannot quit their jobs without employer consent
Correct Answer: Either party may terminate the employment relationship at
any time for any reason
, Rationale: The Employment-at-Will Doctrine states that in the absence of a
contract, either the employer or the employee may terminate the
employment relationship at any time, for any reason, or for no reason at all.
However, there are exceptions to this doctrine, including public policy
exceptions, implied contract exceptions, and the covenant of good faith.
7. Which of the following is an exception to the Employment-at-Will Doctrine?
A) Termination based on race or gender discrimination
B) Termination based on poor performance
C) Termination based on company downsizing
D) Termination based on expiration of a contract
Correct Answer: Termination based on race or gender discrimination
Rationale: The Employment-at-Will Doctrine has several exceptions. One of
the most important is the public policy exception, which prohibits termination
for reasons that violate public policy, such as discrimination based on race,
gender, or other protected characteristics under federal and state anti-
discrimination laws.
8. The Foreign Corrupt Practices Act (FCPA) prohibits:
A) All forms of international trade
B) Bribing foreign officials to obtain or retain business
C) Exporting goods to countries with poor human rights records
D) Investing in foreign companies
Correct Answer: Bribing foreign officials to obtain or retain business
Rationale: The Foreign Corrupt Practices Act (FCPA) prohibits U.S. companies
and individuals from bribing foreign officials to obtain or retain business. It
Corp Gov | Business Law
1. Which of the following best defines ethics?
A) A set of rules for behavior that is legally enforceable
B) The study of how people ought to act, grounded in moral principles
C) A system of laws created by government to regulate business conduct
D) The principles of efficiency and profit maximization in business
Correct Answer: The study of how people ought to act, grounded in moral
principles
Rationale: Ethics is the study of how people ought to act, grounded in moral
principles and values. It differs from law, which is a system of rules
enforceable by government. Ethics often guides behavior beyond what is
legally required, focusing on what is right, just, and fair in both personal and
professional contexts.
2. Which statement best describes the relationship between law and ethics?
A) Law and ethics are identical concepts
B) Law is the minimum standard of conduct; ethics may require more
C) Ethics is always stricter than the law
D) Ethics has no relationship to the law
Correct Answer: Law is the minimum standard of conduct; ethics may require
more
Rationale: Law establishes the minimum standards of behavior that society
will tolerate, while ethics often demands a higher standard of conduct. An
action can be legal but still unethical, and ethical behavior sometimes
,exceeds legal requirements. Understanding both is essential for responsible
business conduct.
3. The stakeholder theory of corporate social responsibility holds that:
A) Only shareholders have a legitimate interest in corporate decisions
B) All individuals and groups affected by corporate decisions have a
legitimate interest
C) Only employees have a legitimate interest in corporate decisions
D) Only customers have a legitimate interest in corporate decisions
Correct Answer: All individuals and groups affected by corporate decisions
have a legitimate interest
Rationale: Stakeholder theory asserts that corporations have obligations to
all parties affected by their decisions, not just shareholders. This includes
employees, customers, suppliers, communities, and the environment. This
broader view of corporate responsibility has become increasingly influential
in modern business ethics.
4. Which of the following is a key element of effective corporate governance?
A) Maximizing short-term profits at any cost
B) Ensuring accountability and transparency in decision-making
C) Minimizing employee involvement in corporate decisions
D) Avoiding all government regulations
Correct Answer: Ensuring accountability and transparency in decision-making
Rationale: Effective corporate governance involves creating structures and
processes that ensure accountability, transparency, fairness, and
responsibility in corporate decision-making. It includes the roles of boards of
,directors, executive compensation, shareholder rights, and transparency in
financial reporting.
5. The Sarbanes-Oxley Act of 2002 was primarily enacted in response to:
A) The Great Depression
B) Major corporate accounting scandals such as Enron and WorldCom
C) The 2008 financial crisis
D) The COVID-19 pandemic
Correct Answer: Major corporate accounting scandals such as Enron and
WorldCom
Rationale: The Sarbanes-Oxley Act (SOX) was enacted in response to high-
profile corporate accounting scandals, including Enron and WorldCom. SOX
established new or enhanced standards for all U.S. public company boards,
management, and public accounting firms, including requirements for CEO
and CFO certification of financial statements and increased penalties for
fraud.
6. The Employment-at-Will Doctrine holds that:
A) Employees can only be terminated for cause
B) Either party may terminate the employment relationship at any time for
any reason
C) Employers cannot terminate employees without providing advance notice
D) Employees cannot quit their jobs without employer consent
Correct Answer: Either party may terminate the employment relationship at
any time for any reason
, Rationale: The Employment-at-Will Doctrine states that in the absence of a
contract, either the employer or the employee may terminate the
employment relationship at any time, for any reason, or for no reason at all.
However, there are exceptions to this doctrine, including public policy
exceptions, implied contract exceptions, and the covenant of good faith.
7. Which of the following is an exception to the Employment-at-Will Doctrine?
A) Termination based on race or gender discrimination
B) Termination based on poor performance
C) Termination based on company downsizing
D) Termination based on expiration of a contract
Correct Answer: Termination based on race or gender discrimination
Rationale: The Employment-at-Will Doctrine has several exceptions. One of
the most important is the public policy exception, which prohibits termination
for reasons that violate public policy, such as discrimination based on race,
gender, or other protected characteristics under federal and state anti-
discrimination laws.
8. The Foreign Corrupt Practices Act (FCPA) prohibits:
A) All forms of international trade
B) Bribing foreign officials to obtain or retain business
C) Exporting goods to countries with poor human rights records
D) Investing in foreign companies
Correct Answer: Bribing foreign officials to obtain or retain business
Rationale: The Foreign Corrupt Practices Act (FCPA) prohibits U.S. companies
and individuals from bribing foreign officials to obtain or retain business. It
