Ecommerce 2016 - Quiz Chapter 07

E-commerce 2016: Business. Technology. Society., 12e (Laudon)
Questions Answers and Case Guides

---

E-commerce 2016: Business. Technology. Society., 12e (Laudon)
Chapter 7   Social, Mobile, and Local Marketing

1) All of the following were popular types of online marketing before 2007 except:

1. A) e-mail.
2. B) corporate Web sites.
3. C) mobile marketing.
4. D) display ads.

Answer:  C
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.1: Understand the difference between traditional online marketing and the new social-mobile-local marketing platforms and the relationships between social, mobile, and local marketing.

2) Which of the following is not true about social marketing?

1. A) More than 50% of Twitter's ad revenues are generated by desktop users.
2. B) Social marketing is growing at around 30% a year.
3. C) Social marketing differs markedly from traditional online marketing.
4. D) In social marketing, business cannot tightly control their brand messaging.

Answer:  A
Difficulty:  Difficult
AACSB:  Application of knowledge
LO:  7.1: Understand the difference between traditional online marketing and the new social-mobile-local marketing platforms and the relationships between social, mobile, and local marketing.

3) The second most popular social network in terms of average minutes per visitor is:

1. A) Instagram.
2. B) Pinterest.
3. C) LinkedIn.
4. D) Tumblr.

Answer:  D
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.1: Understand the difference between traditional online marketing and the new social-mobile-local marketing platforms and the relationships between social, mobile, and local marketing.


4) Which of the following most helped Dagny Aslin of ExchangeHunterJumper.com in establishing her brand in the niche area of selling high-end competition horses?

1. A) integrating online and offline marketing techniques to establish a consistent brand
2. B) adapting marketing techniques to keep up with new Internet technologies
3. C) valuing quality over quantity at each stage in the Web site development process
4. D) establishing customer needs and habits as the top priority in all marketing decisions

Answer:  D
Difficulty:  Difficult
AACSB:  Analytical thinking
LO:  7.1: Understand the difference between traditional online marketing and the new social-mobile-local marketing platforms and the relationships between social, mobile, and local marketing.
5) By 2015, spending on social marketing will be more than double the amount spent on mobile marketing.
Answer:  FALSE
Difficulty:  Easy
AACSB:  Application of knowledge
LO:  7.1: Understand the difference between traditional online marketing and the new social-mobile-local marketing platforms and the relationships between social, mobile, and local marketing.

6) In 2014, spending on mobile marketing was almost three times the amount spent on local online marketing.
Answer:  FALSE
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.1: Understand the difference between traditional online marketing and the new social-mobile-local marketing platforms and the relationships between social, mobile, and local marketing.

7) Traditional desktop marketing has become the smallest part of all online marketing.
Answer:  FALSE
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.1: Understand the difference between traditional online marketing and the new social-mobile-local marketing platforms and the relationships between social, mobile, and local marketing.



8) What has changed in online marketing since 2007?
Answer:  Since 2007, Facebook and other social networking sites have grown rapidly, smartphones have taken the market by storm, and local marketing has taken off. Prior to 2007, online marketing consisted of creating a corporate Web site, buying display ads on Yahoo and purchasing AdWords on Google, and sending e-mail. The display ad was the most prevalent form of online advertising. "Eyeballs" were the primary measure of a site's success, and "impressions" were the measure of an advertising campaign's success. Today, marketing is based on businesses marketing themselves as partners in multiple online conversations with customers and critics. Marketing requires firms to locate and participate in conversations happening on social media. Businesses can no longer tightly control their brand messaging. In addition, in 2007, mobile marketing was in its infancy, but it is now more than double the size of social marketing and location-based marketing.
Difficulty:  Moderate
AACSB:  Analytical thinking; Written and oral communication
LO:  7.1: Understand the difference between traditional online marketing and the new social-mobile-local marketing platforms and the relationships between social, mobile, and local marketing.

9) Which of the following is known primarily for blogs?

1. A) Facebook
2. B) Tumblr
3. C) Google
4. D) Instagram

Answer:  B
Difficulty:  Easy
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.
10) Which of the following is the first step in the social marketing process?

1. A) community
2. B) amplification
3. C) fan acquisition
4. D) engagement

Answer:  C
Difficulty:  Easy
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.


11) Encouraging users to click a Like button is an example of which step in the social marketing process?

1. A) fan acquisition
2. B) brand strength
3. C) community
4. D) amplification

Answer:  D
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

12) Your Facebook News Feed includes all of the following except:

1. A) status updates.
2. B) app activity.
3. C) Likes.
4. D) tweets.

Answer:  D
Difficulty:  Easy
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

13) Which of the following statements about Facebook Exchange is not true?

1. A) It competes with DoubleClick.
2. B) It allows advertisers to target ads.
3. C) It is a social search engine.
4. D) It involves cookies.

Answer:  C
Difficulty:  Difficult
AACSB:  Information technology
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.
14) Ads that appear in a Facebook user's News Feed are called:

1. A) Marketplace Ads.
2. B) Promoted Ads.
3. C) Page Post Ads.
4. D) Brand Ads.

Answer:  C
Difficulty:  Easy
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.


15) Which of the following do Facebook users spend the most time on?

1. A) News Feed
2. B) Photos
3. C) Profiles
4. D) Graph Search

Answer:  A
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

16) Which of the following is a history of your actions on Facebook?

1. A) News Feed
2. B) Timeline
3. C) Ticker
4. D) Open Graph

Answer:  B
Difficulty:  Moderate
AACSB:  Information technology
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

17) Which of the following statements is not true?

1. A) About 75% of Facebook's ad revenue in 2015 is expected to come from its mobile ad platform.
2. B) The only way to access Facebook from a mobile device is to use a mobile app.
3. C) Mobile ads are displayed in users' News Feeds.
4. D) Facebook's mobile ad revenues are its fastest growing revenue stream.

Answer:  B
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.
18) All of the following marketing tools on Facebook require payment except:

1. A) Brand Pages.
2. B) Right-Hand Sidebar Ads.
3. C) News Feed Page Post Ads.
4. D) Mobile Ads.

Answer:  A
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.


19) The ratio of impressions to fans is a measure of:

1. A) engagement.
2. B) amplification.
3. C) community.
4. D) fan acquisition.

Answer:  D
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.



20) Which of the following provides marketers with a real-time digital dashboard so they can see tweet activity about a TV show, commercial, or brand?

1. A) Enhanced Profile Pages
2. B) Amplify
3. C) Lead Generation Cards
4. D) Promoted Accounts

Answer:  B
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

21) Which of the following involves a coupon or other promotional offer that appears in users' Twitter timeline?

1. A) Promoted Tweet
2. B) Promoted Trend
3. C) Promoted Account
4. D) Lead Generation Card

Answer:  D
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.
22) Which of the following statements about Pinterest is not true?

1. A) Pinned photos and photo boards are available to all Pinterest users.
2. B) Pinterest users are overwhelmingly female.
3. C) Pinterest enables users to integrate their pins into their Facebook News Feeds and Twitter streams.
4. D) Pinterest is the only one of the major social networks that does not accept paid advertising.

Answer:  D
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

23) Which of the following are features of both Pinterest and Twitter?

1. A) tweets
2. B) hashtags
3. C) pins
4. D) Image Hover widget

Answer:  B
Difficulty:  Moderate
AACSB:  Information technology
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

24) All of the following are Pinterest marketing tools except:

1. A) Brand pages.
2. B) Product Pins.
3. C) Promoted Pins.
4. D) Promoted Accounts.

Answer:  D
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

25) The number of people exposed to pins is a measure of which of the following?

1. A) engagement
2. B) community
3. C) brand strength
4. D) fan acquisition

Answer:  D
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.
26) Which of the following is an online service specifically aimed at measuring the impact of Pinterest and other visual social media?

1. A) TweetDeck
2. B) Curalate
3. C) Amplify
4. D) Webtrends

Answer:  B
Difficulty:  Moderate
AACSB:  Information technology
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.


27) Which of the following is another term for amplification?

1. A) impressions
2. B) reach
3. C) conversation rate
4. D) conversion ratio

Answer:  B
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

28) All of the following are examples of dark social except:

1. A) e-mail.
2. B) tweets.
3. C) SMS texts.
4. D) Snapchat.

Answer:  B
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

29) Facebook's share price fell dramatically after its IPO because investors feared that:

1. A) Facebook's new marketing solutions would be difficult to monetize.
2. B) new social networks such as Instagram were cannibalizing Facebook's audience.
3. C) privacy concerns were driving users away.
4. D) Facebook would be unable to increase advertising revenues fast enough to justify its price.

Answer:  D
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.
30) Which of the following allows Facebook to track user behavior on other sites and then sell the information to marketers?

1. A) Open Graph
2. B) Like button
3. C) hashtags
4. D) Whatsapp

Answer:  B
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.


31) Which of the following is not true about Facebook News Feed Page Post Ads?

1. A) They have a tiny tag indicating that they are sponsored.
2. B) They can be liked, shared, and commented on, just like any News Feed post.
3. C) They cannot contain links.
4. D) They have social context.

Answer:  C
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

32) Which of the following is a micro-blogging social network site that allows users to send and receive 140-character messages?

1. A) Facebook
2. B) Twitter
3. C) Pinterest
4. D) Instagram

Answer:  B
Difficulty:  Easy
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

33) Companies are not permitted to collect personal information from children under the age of ________ without parental consent.

1. A) 8
2. B) 10
3. C) 13
4. D) 16

Answer:  C
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.
34) Which of the following was the object of the FTC's first-ever COPPA enforcement action involving mobile apps?

1. A) Disney's Playdom
2. B) W3 Innovation
3. C) Snapchat
4. D) Yelp

Answer:  B
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

35) Which of the following is most similar to Pinterest?

1. A) LinkedIn
2. B) Instagram
3. C) YouTube
4. D) Tumblr

Answer:  B
Difficulty:  Difficult
AACSB:  Analytical thinking
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

36) Which social marketing proved the most effective for ExchangeHunterJumper.com?

1. A) Facebook
2. B) YouTube
3. C) Pinterest
4. D) Instagram

Answer:  A
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

37) Which of the following refers to the number of interactions among members of a group and reflects the "connectedness" of the group, even if these connections are forced on users?

1. A) engagement
2. B) information density
3. C) social density
4. D) amplification

Answer:  C
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.
38) Which of the following refers to those forms of social sharing that occur off the major social networks, through alternative communication tools?

1. A) social density
2. B) dark social
3. C) amplification
4. D) engagement

Answer:  B
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.


39) Which of the following is a real-time bidding system that allows advertisers to target their ads to specific users based on personal information provided by Facebook?

1. A) Amplify
2. B) FBX
3. C) DoubleClick
4. D) PTAT

Answer:  B
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

40) All of the following are in the process of either testing or offering Buy button to advertisers except:

1. A) Facebook.
2. B) LinkedIn.
3. C) Pinterest.
4. D) Instagram.

Answer:  B
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

41) Which of the following involves using a variety of tools to encourage users to interact with content and brand?

1. A) social density
2. B) engagement
3. C) amplification
4. D) dark social

Answer:  B
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.
42) Which of the following involves using the inherent strength of social networks to encourage visitors and fans to share their Likes and comments with friends?

1. A) social density
2. B) engagement
3. C) amplification
4. D) dark social

Answer:  C
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

43) Which of the following is a Facebook feature that allows app developers to integrate their apps into the Facebook pages of users who sign up for the app?

1. A) Whatsapp
2. B) Like button
3. C) Graph Search
4. D) Open Graph

Answer:  D
Difficulty:  Moderate
AACSB:  Information technology
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

44) Visitors spend significantly more time on Facebook than any other social network site.
Answer:  TRUE
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

45) Facebook's Search functionality includes everyone's public posts, Likes, photos, and interests, and makes them available to all users of Facebook, even those who are not friends.
Answer:  TRUE
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

46) Facebook does not sell display ads.
Answer:  FALSE
Difficulty:  Easy
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

47) Brand pages on Facebook typically attract more visitors than a brand's Web site.
Answer:  TRUE
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

48) Promoted Trends is Twitter's version of Google's Ad Words.
Answer:  FALSE
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

49) Pinterest's visitors are predominantly women.
Answer:  TRUE
Difficulty:  Easy
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

50) Over 65% of Facebook's ad revenue is generated by its mobile audience.
Answer:  TRUE
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

51) What are some of the downsides of social marketing?
Answer:  Social marketing is not without its disadvantages. One problem is that brands lose a substantial amount of control over where their ads appear in terms of other content and what people say about their brands on social sites. Ads placed on Facebook according to an algorithm can be placed near content that does not represent the values of the brand. This is not peculiar to social marketing, as advertising using Google's advertising platform faces the same problem. This is very different, however, from TV ads where brands maintain near complete control. Social sites are unique in that disgruntled consumers, or just malicious people, can post material that is inaccurate and/or embarrassing.
Difficulty:  Moderate
AACSB:  Application of knowledge; Written and oral communication
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

52) Name and describe the five steps in the social marketing process.
Answer:  The five steps in the social marketing process are fan acquisition, engagement, amplification, community, and brand strength.

Social marketing campaigns begin with fan acquisition, which involves using any of a variety of means, from display ads to News Feed and page pop-ups, to attract people to your Facebook page, Twitter feed, or other platform like a Web page. The next step is to generate engagement, which involves using a variety of tools to encourage users to interact with your content and brand located on your Facebook or Web pages. You can think of this as "starting the conversation" around your brand.

Once you have engaged visitors, you can begin to use social site features to amplify your messages by encouraging users to tell their friends by clicking a Like or +1 button, or by sending a message to their followers on Twitter. Amplification involves using the inherent strength of social networks to continue the spread of its message. Once you have gathered enough engaged fans, you will have created the foundation for a community – a more or less stable group of fans who are engaged and communicating with one another over a substantial period of time (say several months or more). The ultimate goal is to enlarge your firm's "share of the online conversation." The process ends with strengthening the brand and, hopefully, additional sales of products and services.
Difficulty:  Moderate
AACSB:  Application of knowledge; Written and oral communication
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.


53) Name and describe five of the marketing tools available with Facebook.
Answer:  Some of the many marketing tools available via Facebook are Right-hand Sidebar Ads, News Feed Page Post Ads, Brand Pages, Like Buttons, mobile ads, and Facebook Exchange (FBX).

Right-hand Sidebar Ads are display ads shown in the right column on a user's profile and home Facebook pages. They are often used to direct users to off-Facebook content such as Web site landing pages and content offers. Facebook has recently reduced the number of ads that appear in the right-hand column sidebar from seven to two, increased their size, and made them consistent with the format of News Feed Page Post Ads in an effort to enhance their performance.

The News Feed is the most prominent place for advertisements. The News Feed is the center of the action for Facebook users and where Facebook users spend most of their time because that is where posts from their friends appear. Page Post Ads appear in a user's News Feed along with all of the other posts and status updates that normally appear from friends. Page Post Ads have a tiny tag that indicates that they are sponsored (i.e., are advertisements) but otherwise look very similar to posts from friends. They have social context ("John Smith and Jane Doe like Pottery Barn") and can be liked, shared, and commented on, just like any other post. Page Post Ads can contain text, photos, video, and links. They can be used for many of marketing objectives, such as increasing brand engagement, obtaining Likes for the brand's Facebook page, and encouraging app installs and engagement. Companies pay to promote or boost Page Post Ads in order to extend their reach.

Nearly all Fortune 1000 companies, and hundreds of thousands of smaller firms, have Facebook brand pages, similar to brand Web sites, on Facebook as an adjunct to their main Web site. The purpose of a brand page is to develop fans of the brand by providing users opportunities to interact with the brand through comments, contests, and offerings. Using social calls to action, such as "Like us on Facebook" and "Share," brand pages can escape their isolation and make it more easily into users' social networks, where friends can hear the message. Social brand pages have many more social opportunities for fans to like and comment than are typical of traditional Web pages. However, corporate Web sites have, over time, adopted many social features and the two are now often indistinguishable. Brand pages on Facebook typically attract more visitors than a brand's Web site.

The Like button enables users to share their feelings with friends and friends of friends about content and other objects they are viewing and Web sites they are visiting. The Like button provides amplification for marketers.

Facebook also offers mobile display and app-install ads (its mobile ad platform is its fastest growing revenue stream), and Facebook Exchange (FBX), a real-time ad exchange, which enables marketers to sells ads and retarget ads.
Difficulty:  Moderate
AACSB:  Application of knowledge; Written and oral communication
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.


54) What are the basic steps in creating a Pinterest marketing campaign?
Answer:  The first step is to create a brand page and pin photos of your products, ensuring that you change your selections regularly and use high quality photos. Next, use URL links and keywords so that followers can easily find and buy the projects you have pinned. Use of hashtags helps organize your photos.

Creating a Pinterest Product pin helps businesses in certain industries that are cost competitive like food, retail, or movie distribution. Adding Pin It buttons also encourages followers to pin your photos to their own boards and share them with friends. Developing theme-based boards also enhances the entertainment and branding aspects of Pinterest.

Incorporating Facebook and Twitter into the campaign draws users from those networks onto Pinterest, and integrating with those services allows users to navigate seamlessly from Facebook and Twitter to Pinterest. Being active on social media is also important to get the most out of it.
Difficulty:  Moderate
AACSB:  Application of knowledge; Written and oral communication
LO:  7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

55) Which of the following is not true about mobile marketing?

1. A) Mobile marketing is the fastest growing form of online marketing.
2. B) Mobile marketing is growing at around 30% a year.
3. C) A substantial part of mobile marketing should be counted as social marketing.
4. D) People use most of their mobile minutes while they are on the go.

Answer:  D
Difficulty:  Difficult
AACSB:  Application of knowledge
LO:  7.3: Identify the key elements of a mobile marketing campaign.
56) Which of the following is the top app in terms of both audience size and share of time spent?

1. A) YouTube
2. B) iTunes
3. C) Twitter
4. D) Facebook

Answer:  D
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.3: Identify the key elements of a mobile marketing campaign.


57) How many retail-oriented apps are there in the top 25 apps?

1. A) 0
2. B) 1
3. C) 2
4. D) 5

Answer:  C
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.3: Identify the key elements of a mobile marketing campaign.

58) Which of the following statements is not true?

1. A) Google is the leading display ad site on mobile devices.
2. B) Google is the largest distributor of video ads on the mobile platform.
3. C) Mobile advertising is dominated by Google.
4. D) Google generates almost two-thirds of all mobile search ad spending.

Answer:  A
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.3: Identify the key elements of a mobile marketing campaign.

59) Which of the following is the most popular use for mobile devices?

1. A) shopping
2. B) socializing
3. C) entertainment
4. D) performing tasks, such as finances

Answer:  C
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.3: Identify the key elements of a mobile marketing campaign.

60) According to a recent National Federation of Retailers survey, what percentage of tablet users plan to purchase anything with their tablets?

1. A) Around 75%
2. B) Around 50%
3. C) Around 33%
4. D) Around 35%

Answer:  C
Difficulty:  Difficult
AACSB:  Application of knowledge
LO:  7.3: Identify the key elements of a mobile marketing campaign.

61) Which of the following accounts for the most time people spend using a mobile device?

1. A) watching video
2. B) social networks
3. C) listening to music
4. D) reading news and magazines

Answer:  C
Difficulty:  Moderate
AACSB:  Information technology
LO:  7.3: Identify the key elements of a mobile marketing campaign.

62) Around how many apps do users regularly use a month?

1. A) 10
2. B) 26
3. C) 30
4. D) 50

Answer:  B
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.3: Identify the key elements of a mobile marketing campaign.

63) In 2015, mobile marketing was about ________% of all online marketing.

1. A) 15%
2. B) 25%
3. C) 40%
4. D) 50%

Answer:  C
Difficulty:  Difficult
AACSB:  Application of knowledge
LO:  7.3: Identify the key elements of a mobile marketing campaign.

64) Which of the following accounts for the most mobile ad spending?

1. A) display ads
2. B) search engine advertising
3. C) video ads
4. D) SMS text messages

Answer:  B
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.3: Identify the key elements of a mobile marketing campaign.


65) Which of the following is not a major provider of mobile display advertising?

1. A) MoPub
2. B) iAd
3. C) AdMob
4. D) Webtrends

Answer:  D
Difficulty:  Difficult
AACSB:  Application of knowledge
LO:  7.3: Identify the key elements of a mobile marketing campaign.
66) Which of the following is the leading mobile retailer in the United States?

1. A) Walmart
2. B) Amazon
3. C) Google
4. D) QVC

Answer:  B
Difficulty:  Easy
AACSB:  Application of knowledge
LO:  7.3: Identify the key elements of a mobile marketing campaign.

67) Which of the following technologies has Apple adopted in its hardware for Apple Pay?

1. A) GPS
2. B) NFC
3. C) BLE
4. D) QR codes

Answer:  B
Difficulty:  Moderate
AACSB:  Information technology
LO:  7.3: Identify the key elements of a mobile marketing campaign.

68) Which of the following statements about BLE is not true?

1. A) Only Apple iPhones can use BLE.
2. B) BLE uses less power than traditional Bluetooth or GPS.
3. C) BLE has a two-way, push-pull communication capability.
4. D) BLE is more accurate than targeting through Wi-Fi triangulation.

Answer:  A
Difficulty:  Moderate
AACSB:  Information technology
LO:  7.3: Identify the key elements of a mobile marketing campaign.


69) According to a recent National Federation of Retailers survey, consumers are more likely to use tablets rather than smartphones for all of the following except:

1. A) research products.
2. B) purchase products.
3. C) redeem coupons.
4. D) check for in-store availability.

Answer:  C
Difficulty:  Difficult
AACSB:  Application of knowledge
LO:  7.3: Identify the key elements of a mobile marketing campaign.

70) It is expected that by 2019, mobile commerce will account for about one-third of all e-commerce in the retail and travel industries.
Answer:  TRUE
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.3: Identify the key elements of a mobile marketing campaign.

71) Smartphones are the fastest growing and largest source of mobile commerce revenues.
Answer:  FALSE
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.3: Identify the key elements of a mobile marketing campaign.
72) SMS text messaging generates the majority of mobile marketing spending.
Answer:  FALSE
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.3: Identify the key elements of a mobile marketing campaign.


73) What are the implications for marketers given that mobile users spend over 70% of their smartphone time using apps and that on average, users only use about 26 apps a month?
Answer:  The implications for marketers are quite clear: if consumers are primarily using apps rather than browsing the Web on their mobile devices, marketers need to place ads in apps where most of the action is for attracting consumers, and that means social, entertainment, and game sites. Second, if mobile consumers only use, on average, 26 apps, then marketers need to concentrate their marketing in these popular apps, let's say, the top 100. Niche marketers, on the other hand, can concentrate their ads in apps that support that niche. A distributor of diving equipment, for instance, could place ads in apps devoted to the diving community. There may not be many users of the app, but those who do use it are highly motivated on the topic. Another implication for marketers is that rather than focus on mobile display ads that are difficult to read, the best ad may be an app that directly serves customer interest or an ad in an app that is precisely targeted to the consumer's current activities and interests. For instance, ads in newsfeeds, or pre-roll ads prior to music or video, will do much better than display ads placed elsewhere.
Difficulty:  Moderate
AACSB:  Application of knowledge; Written and oral communication
LO:  7.3: Identify the key elements of a mobile marketing campaign.
74) How does the multi-screen environment change the marketing funnel?
Answer:  Consumer purchasing behavior changes in a multi-screen world. Consumers will often be using two or more screens at once, tweeting when watching a TV show, or moving seamlessly from a TV ad, to a mobile search for more information, to a later tablet purchase screen. Also, the more screens people use, the more shopping and purchasing they do. One conclusion is that the more screens consumers have, the more consumer touchpoints or marketing opportunities exist. The implications of the multi-device platform, or screen diversity environment, are that marketing needs to be designed for whatever device the consumer is using, and consistent branding across platforms will be important. Screen diversity means that one ad size, for instance, will not fit all situations, and that branding images will need to be adjusted automatically based on the device the consumer is using. From a design perspective, graphics and creative elements will appear differently depending on the screen. The requirement to find customers on multiple screens can add considerably to the cost of marketing online. Companies may find that they need to develop a presence and market not only on Web sites, but on mobile Web sites, and/or smartphone apps as well. Perhaps they may not be able to afford all three, and may want to choose only one. In that case, which is the best? Much depends on what the point of the marketing is. To drive sales, a Web site might be more effective, but to drive brand awareness, and engagement, social and entertainment apps might be better. But even beyond screen adaptability, a multi-screen world means merchants need to be on all platforms, and to be integrated across platforms, in order to send a coherent message and to create a convenient consumer platform. The marketing environment today is much more complex than placing banner ads on pages or on search engine results pages on the Web.
Difficulty:  Difficult
AACSB:  Application of knowledge; Written and oral communication
LO:  7.3: Identify the key elements of a mobile marketing campaign.


75) How do people actually use their mobile devices today?
Answer:  Most people believe that people use their mobile devices on the go, but in fact, according to one of the very few studies of actual mobile behavior, almost 70% of all mobile minutes actually occur in the home. People spend 5.5 hours with digital media on average daily, and nearly three of these hours is spent using mobile devices–smartphones and tablets. Recent data show that entertainment, not shopping or buying, is the primary focus (at least in terms of time) for mobile device users. Of the three hours (180 minutes) a day that people are spending using their mobile devices, 27 minutes (15%) is spent on social networks. Smartphones are more popular for this social activity (18 minutes) versus tablets (9 minutes). Watching video accounts for 26 minutes (14%), of which 14 minutes is spent on tablets versus 12 minutes on smartphones. Listening to music, primarily via streaming music services, accounts for 44 minutes (24%), presumably mostly on smartphones. Hence, nearly 40% of mobile device use is for entertainment (music and video), with social networks consuming another 15%. Another recent survey by Pew Research Center described the broad range of activities that mobile users accomplish on their mobile devices when they are not entertaining themselves or socializing. People use the mobile devices for pretty much the same activities as they do their desktop computers, from getting information, to banking, and looking for places to live. However, this survey did not include data on shopping and purchasing behavior, and did not include information on time spent with the activity.
Difficulty:  Moderate
AACSB:  Application of knowledge; Written and oral communication
LO:  7.3: Identify the key elements of a mobile marketing campaign.
76) Which of the following is currently a small part of the online marketing universe, but is expected to triple over the next five years?

1. A) local marketing
2. B) location-based mobile marketing
3. C) mobile marketing
4. D) social marketing on Facebook

Answer:  B
Difficulty:  Easy
AACSB:  Application of knowledge
LO:  7.4: Understand the capabilities of location-based local marketing.

77) Macy's deployed which of the following technologies in many of its retail stores in 2014?

1. A) QR codes
2. B) iBeacon
3. C) E9-1-1
4. D) Geo-search

Answer:  B
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.4: Understand the capabilities of location-based local marketing.


78) Which of the following earns the most location-based marketing revenue?

1. A) Twitter
2. B) Apple
3. C) Facebook
4. D) Google

Answer:  D
Difficulty:  Easy
AACSB:  Application of knowledge
LO:  7.4: Understand the capabilities of location-based local marketing.

79) Apple's iBeacon uses which of the following technologies?

1. A) BLE
2. B) NFC
3. C) E9-1-1
4. D) QR codes

Answer:  A
Difficulty:  Moderate
AACSB:  Information technology
LO:  7.4: Understand the capabilities of location-based local marketing.

80) A recent Google survey found that ________ % of smartphone users visit a store within a day of conducting a local search.

1. A) 15
2. B) 25
3. C) 50
4. D) 75

Answer:  C
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.4: Understand the capabilities of location-based local marketing.
81) Google uses which of the following to build a global database of wireless access points and their geographic locations?

1. A) E9-1-1
2. B) Street View cars
3. C) iBeacons
4. D) BLE

Answer:  B
Difficulty:  Moderate
AACSB:  Information technology
LO:  7.4: Understand the capabilities of location-based local marketing.

82) Google provides the leading location-based marketing platform.
Answer:  TRUE
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  7.4: Understand the capabilities of location-based local marketing.

83) A cell phone's GPS is accurate to within five feet of the actual location of the phone.
Answer:  FALSE
Difficulty:  Moderate
AACSB:  Information technology
LO:  7.4: Understand the capabilities of location-based local marketing.

84) What technologies and techniques are employed in location-based mobile marketing?
Answer:  There are two general types of location-based marketing techniques: geo-aware and proximity marketing. Geo-aware techniques identify the location of a user's device and then target marketing to the device, recommending actions within. Proximity marketing techniques identify a perimeter around a physical location, and then target ads to users within that perimeter, recommending actions possible within the fenced-in area. The perimeter can be from hundreds of feet (in urban areas) to several miles (in suburban locations). For instance, if users walk into the geo-fenced perimeter of a store, restaurant, or retail shop, they will receive ads from these businesses. Both of these techniques utilize the same locating technologies. GPS is the most accurate positioning method in theory, but in practice, the signal can be weak in urban areas, nonexistent inside buildings, signals can be deflected, and it can take a long time (30-60 seconds) for the device to acquire the signal and calculate a position. Wi-Fi location is used in conjunction with GPS signals to more accurately locate a user based on the known location of Wi-Fi transmitters, which are fairly ubiquitous in urban and suburban locations. Apple's iBeacon technology uses Bluetooth low energy (BLE), which uses less battery power than traditional Bluetooth or GPS and is more accurate than targeting through Wi-Fi triangulation.
Difficulty:  Moderate
AACSB:  Application of knowledge; Written and oral communication
LO:  7.4: Understand the capabilities of location-based local marketing.
85) Why is local mobile marketing so attractive to marketers?
Answer:  Consumers who seek information about local businesses using mobile devices are much more active and ready to purchase than desktop users. In part this is because desktop searchers for local information are not in as close proximity to merchants as are mobile searchers. A recent Google survey found over 80% of U.S. consumers use smartphones or tablet computers to conduct local searches on search engines for a variety of local information such as business hours, local store addresses and directions, and availability of local information through the purchase process, and 50% of smartphone users visited a store within a day of their local search, and 18% made a purchase within a day. The survey also found that over 60% of smartphone users wanted ads customized both to their city/zip code and to their immediate surroundings.
Difficulty:  Moderate
AACSB:  Application of knowledge; Written and oral communication
LO:  7.4: Understand the capabilities of location-based local marketing.

Ecommerce 2016 - Quiz Chapter 05

E-commerce 2016: Business. Technology. Society., 12e (Laudon)
Questions Answers and Case Guides

---

E-commerce 2016: Business. Technology. Society., 12e (Laudon)
Chapter 5   E-commerce Security and Payment Systems

1) Confidentiality is sometimes confused with:

1. A) privacy.
2. B) authenticity.
3. C) integrity.
4. D) nonrepudiation.

Answer:  A
Difficulty:  Easy
AACSB:  Application of knowledge
LO:  5.1: Understand the scope of e-commerce crime and security problems, the key dimensions of e-commerce security, and the tension between security and other values.

2) ________ refers to the ability to ensure that e-commerce participants do not deny their online actions.

1. A) Nonrepudiation
2. B) Authenticity
3. C) Availability
4. D) Integrity

Answer:  A
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.1: Understand the scope of e-commerce crime and security problems, the key dimensions of e-commerce security, and the tension between security and other values.

3) ________ refers to the ability to identify the person or entity with whom you are dealing on the Internet.

1. A) Nonrepudiation
2. B) Authenticity
3. C) Availability
4. D) Integrity

Answer:  B
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.1: Understand the scope of e-commerce crime and security problems, the key dimensions of e-commerce security, and the tension between security and other values.


4) Which of the following is an example of an integrity violation of e-commerce security?

1. A) A Web site is not actually operated by the entity the customer believes it to be.
2. B) A merchant uses customer information in a manner not intended by the customer.
3. C) A customer denies that he or she is the person who placed the order.
4. D) An unauthorized person intercepts an online communication and changes its contents.

Answer:  D
Difficulty:  Moderate
AACSB:  Analytical thinking
LO:  5.1: Understand the scope of e-commerce crime and security problems, the key dimensions of e-commerce security, and the tension between security and other values.
5) ________ refers to the ability to ensure that an e-commerce site continues to function as intended.

1. A) Nonrepudiation
2. B) Authenticity
3. C) Availability
4. D) Integrity

Answer:  C
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.1: Understand the scope of e-commerce crime and security problems, the key dimensions of e-commerce security, and the tension between security and other values.

6) Which of the following is an example of an online privacy violation?

1. A) your e-mail being read by a hacker
2. B) your online purchasing history being sold to other merchants without your consent
3. C) your computer being used as part of a botnet
4. D) your e-mail being altered by a hacker

Answer:  B
Difficulty:  Moderate
AACSB:  Analytical thinking
LO:  5.1: Understand the scope of e-commerce crime and security problems, the key dimensions of e-commerce security, and the tension between security and other values.


7) ________ refers to the ability to ensure that messages and data are only available to those authorized to view them.

1. A) Confidentiality
2. B) Integrity
3. C) Privacy
4. D) Availability

Answer:  A
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.1: Understand the scope of e-commerce crime and security problems, the key dimensions of e-commerce security, and the tension between security and other values.


8) Typically, the more security measures added to an e-commerce site, the faster and easier it becomes to use.
Answer:  FALSE
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.1: Understand the scope of e-commerce crime and security problems, the key dimensions of e-commerce security, and the tension between security and other values.

9) Why is it difficult to accurately estimate the actual amount of cybercrime?
Answer:  It is difficult to accurately estimate the actual amount of cybercrime in part because many companies are hesitant to report it due to the fear of losing the trust of their customers, and because even if crime is reported, it may be difficult to quantify the actual dollar amount of the loss.
Difficulty:  Moderate
AACSB:  Analytical thinking; Written and oral communication
LO:  5.1: Understand the scope of e-commerce crime and security problems, the key dimensions of e-commerce security, and the tension between security and other values.
10) All of the following experienced high-profile data breaches in 2014 except:

1. A) eBay.
2. B) Home Depot.
3. C) Amazon.
4. D) Sony.

Answer:  C
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  5.2: Identify the key security threats in the e-commerce environment.

11) Bitcoins are an example of:

1. A) digital cash.
2. B) virtual currency.
3. C) a stored value payment system.
4. D) an EBPP system.

Answer:  A
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.

12) The overall rate of online credit card fraud is ________ of all online card transactions.

1. A) less than 1%
2. B) around 5%
3. C) around 10%
4. D) around 15%

Answer:  A
Difficulty:  Difficult
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.

13) Which of the following has the Internet Advertising Bureau urged advertisers to abandon?

1. A) HTML
2. B) HTML5
3. C) Adobe Flash
4. D) Adobe Acrobat

Answer:  C
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.

14) Accessing data without authorization on Dropbox is an example of which of the following?

1. A) social network security issue
2. B) cloud security issue
3. C) mobile platform security issue
4. D) sniffing

Answer:  B
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.
15) All of the following are prominent hacktivist groups except:

1. A) Anonymous.
2. B) LulzSec.
3. C) Impact Team.
4. D) Avid Life.

Answer:  D
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.

16) Slammer is an example of which of the following?

1. A) virus
2. B) worm
3. C) Trojan horse
4. D) botnet

Answer:  B
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.


17) Which of the following is the leading cause of data breaches?

1. A) theft of a computer
2. B) accidental disclosures
3. C) hackers
4. D) DDoS attacks

Answer:  C
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.

18) Software that is used to obtain private user information such as a user's keystrokes or copies of e-mail is referred to as:

1. A) spyware.
2. B) a backdoor.
3. C) browser parasite.
4. D) adware.

Answer:  A
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.

19) In 2014, Sony experienced which of the following?

1. A) a high-profile data breach
2. B) a DDoS attack that shut down its Web site
3. C) a hacktivist attack to protest its employment policies
4. D) a browser parasite

Answer:  A
Difficulty:  Easy
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.


20) What is the most frequent cause of stolen credit cards and card information today?

1. A) lost cards
2. B) the hacking and looting of corporate servers storing credit card information
3. C) sniffing programs
4. D) phishing attacks

Answer:  B
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.


21) Which dimension(s) of security is spoofing a threat to?

1. A) integrity
2. B) availability
3. C) integrity and authenticity
4. D) availability and integrity

Answer:  C
Difficulty:  Difficult
AACSB:  Analytical thinking
LO:  5.2: Identify the key security threats in the e-commerce environment.

22) Which of the following is not an example of malicious code?

1. A) scareware
2. B) Trojan horse
3. C) bot
4. D) sniffer

Answer:  D
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.

23) Zeus is an example of which of the following?

1. A) SQL injection attack
2. B) browser parasite
3. C) DDoS attack
4. D) Trojan horse/botnet

Answer:  D
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.

24) Rustock is an example of which of the following?

1. A) worm
2. B) botnet
3. C) phishing
4. D) hacktivism

Answer:  B
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.

25) Malware that comes with a downloaded file that a user requests is called a:

1. A) Trojan horse.
2. B) backdoor.
3. C) drive-by download.
4. D) PUP.

Answer:  C
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.

26) Which of the following is not an example of a PUP?

1. A) adware
2. B) browser parasite
3. C) drive-by download
4. D) spyware

Answer:  C
Difficulty:  Difficult
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.

27) Which of the following was designed to cripple Iranian nuclear centrifuges?

1. A) Stuxnet
2. B) Flame
3. C) Snake
4. D) Storm

Answer:  A
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.

28) Automatically redirecting a Web link to a different address is an example of which of the following?

1. A) sniffing
2. B) social engineering
3. C) pharming
4. D) DDoS attack

Answer:  C
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.


29) FREAK is an example of which of the following?

1. A) mobile malware
2. B) software vulnerability
3. C) botnet
4. D) Trojan horse

Answer:  B
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.
30) According to Ponemon Institute's 2015 survey, which of the following was not among the causes of the most costly cybercrimes?

1. A) malicious insiders
2. B) malicious code
3. C) denial of service
4. D) botnets

Answer:  C
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.

31) ________ typically attack governments, organizations, and sometimes individuals for political purposes.

1. A) Crackers
2. B) White hats
3. C) Grey hats
4. D) Hacktivists

Answer:  D
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.

32) A worm does not need to be activated by a user in order for it to replicate itself.
Answer:  TRUE
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.

33) A Trojan horse appears to be benign, but then does something other than expected.
Answer:  TRUE
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.


34) Phishing attacks rely on browser parasites.
Answer:  FALSE
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.

35) CryptoLocker is an example of ransomware.
Answer:  TRUE
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.

36) Spoofing a Web site is a threat to the integrity of the Web site.
Answer:  TRUE
Difficulty:  Difficult
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.
37) Exploit kits are often rented or sold as a commercial product.
Answer:  TRUE
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.

38) Vishing attacks exploit SMS messages.
Answer:  FALSE
Difficulty:  Difficult
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.

39) ShellShock is an example of a software vulnerability.
Answer:  TRUE
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.2: Identify the key security threats in the e-commerce environment.


40) What is the Internet of Things (IoT) and what security issues and challenges does it raise?
Answer:  The Internet of Things (IoT) involves the use of the Internet to connect a wide variety of sensors, devices, and machines, and is powering the development of a multitude of smart connected things, such as home electronics (smart TVs, thermostats, home security systems, and more), connected cars, medical devices and industrial equipment that supports manufacturing, energy, transportation, and other industrial sectors. IoT raises a host of security issues that are in some ways similar to existing security issues, but even more challenging, given the need to deal with a wider range of devices, operating in a less controlled, global environment, and with an expanded range of attack. In a world of connected things, the devices, the data produced and used by the devices, and the systems and applications supported by those devices, can all potentially be attacked. IoT poses a number of unique security challenges. For instance, many IoT devices, such as sensors, are intended to be deployed on a much greater scale than traditional Internet-connected devices, creating a vast quantity of interconnected links that can be exploited. Existing tools, methods, and strategies need to be developed to deal with this unprecedented scale. Many instances of IoT consist of collections of identical devices that all have the same characteristics, which magnifies the potential impact of security vulnerabilities. Many IoT devices are anticipated to have a much longer service life than typical equipment, which raises the possibility that devices may "outlive" manufacturer, leaving them without long-term support that creates persistent vulnerabilities. Many IoT devices are intentionally designed without the ability to be upgraded, or the upgrade process is difficult, which raises the possibility that vulnerable devices cannot or will not be fixed, leaving them perpetually vulnerable. Many IoT devices do not provide the user with visibility into the workings of the device or the data being produced, nor alert the user when a security problem arises, so users may believe an IoT device is functioning as intended when in fact, it may be performing in a malicious manner. Finally, some IoT devices, such as sensors, are unobtrusively embedded in the environment such that a user may not even be aware of the device, so a security breach might persist for a long time before being noticed.
Difficulty:  Moderate
AACSB:  Analytical thinking; Information technology; Written and oral communication
LO:  5.2: Identify the key security threats in the e-commerce environment.
41) Discuss the Great Cannon. Who developed it, how has it been used, and how does it differ from the Great Firewall?
Answer:  The Great Cannon is the nickname given by researchers to a tool believed to be developed by China that was used to launch a major DDoS attack in March 2015 against the software development platform GitHub, aimed specifically at two Chinese anti-censorship projects hosted on the platform. Although originally thought to be part of the Great Firewall, which is a system developed by China that allows it to censor Internet traffic, further investigation revealed that the Great Cannon appears to be a separate distinct offensive system that is co-located with the Great Firewall. The Great Cannon enables hackers to hijack traffic to individual IP addresses and uses a man-in-the-middle attack to replace unencrypted content between a Web server and the user with malicious Javascript that would load the two GitHub project pages every two seconds.
Difficulty:  Moderate
AACSB:  Analytical thinking; Information technology; Written and oral communication
LO:  5.2: Identify the key security threats in the e-commerce environment.

42) What is a sniffing attack and how does it differ from a MitM attack?
Answer:  A sniffer is a type of eavesdropping program that monitors information traveling over a network. When used legitimately in a sniffing attack, hackers use sniffers to steal proprietary information from a network, including passwords, e-mail messages, company files, and confidential reports. A man-in-the-middle (MitM) attack also involves eavesdropping but is more active than a sniffing attack, which typically involves passive monitoring. In a MitM attack, the attacker is able to intercept communications between two parties who believe they are directly communicating with one another, when in fact the attacker is controlling the communications.
Difficulty:  Moderate
AACSB:  Analytical thinking; Information technology; Written and oral communication
LO:  5.2: Identify the key security threats in the e-commerce environment.
43) Discuss and explain the various types of malicious code and how they work. Include the different types of viruses.
Answer:  Malicious code includes a variety of threats such as viruses, worms, Trojan horses, ransomware, and bot programs. A virus is a computer program that can replicate or make copies of itself and spread to other files. Viruses can range in severity from simple programs that display a message or graphic as a "joke" to more malevolent code that will destroy files or reformat the hard drive of a computer, causing programs to run incorrectly. Worms are designed to spread not only from file to file but from computer to computer and do not necessarily need to be activated in order to replicate. A Trojan horse is not itself a virus because it does not replicate but it is a method by which viruses or other malicious code can be introduced into a computer system. It appears benign and then suddenly does something harmful. For example, it may appear to be only a game and then it will steal passwords and mail them to another person. A backdoor is a feature of worms, viruses, and Trojans that allow attackers to remotely access compromised computers. Ransomware (or also known as scareware) is a type of malware (often a worm) that locks your computer or files to stop you from accessing them. Bot programs are a type of malicious code that can be covertly installed on a computer when it is attached to the Internet. Once installed, the bot responds to external commands sent by the attacker, and many bots can be coordinated by a hacker into a botnet.
Difficulty:  Moderate
AACSB:  Analytical thinking; Information technology; Written and oral communication
LO:  5.2: Identify the key security threats in the e-commerce environment.

44) Next generation firewalls provide all of the following except:

1. A) an application-centric approach to firewall control.
2. B) the ability to identify applications regardless of the port, protocol, or security evasion tools used.
3. C) the ability to automatically update applications with security patches.
4. D) the ability to identify users regardless of the device or IP address.

Answer:  C
Difficulty:  Difficult
AACSB:  Information technology
LO:  5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.


45) Symmetric key cryptography is also known as:

1. A) public key cryptography.
2. B) secret key cryptography.
3. C) PGP.
4. D) PKI.

Answer:  B
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.
46) All the following statements about symmetric key cryptography are true except:

1. A) in symmetric key cryptography, both the sender and the receiver use the same key to encrypt and decrypt a message.
2. B) the Data Encryption Standard is a symmetric key encryption system.
3. C) symmetric key cryptography is computationally slower.
4. D) symmetric key cryptography is a key element in digital envelopes.

Answer:  C
Difficulty:  Difficult
AACSB:  Information technology
LO:  5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

47) The Data Encryption Standard uses a(n) ________-bit key.

1. A) 8
2. B) 56
3. C) 256
4. D) 512

Answer:  B
Difficulty:  Difficult
AACSB:  Information technology
LO:  5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

48) All of the following statements about public key cryptography are true except:

1. A) public key cryptography uses two mathematically related digital keys.
2. B) public key cryptography ensures authentication of the sender.
3. C) public key cryptography does not ensure message integrity.
4. D) public key cryptography is based on the idea of irreversible mathematical functions.

Answer:  B
Difficulty:  Difficult
AACSB:  Information technology
LO:  5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.


49) Which of the following is the current standard used to protect Wi-Fi networks?

1. A) WEP
2. B) TLS
3. C) WPA2
4. D) WPA3

Answer:  C
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.
50) All of the following statements about PKI are true except:

1. A) The term PKI refers to the certification authorities and digital certificate procedures that are accepted by all parties.
2. B) PKI is not effective against insiders who have a legitimate access to corporate systems including customer information.
3. C) PKI guarantees that the verifying computer of the merchant is secure.
4. D) The acronym PKI stands for public key infrastructure.

Answer:  C
Difficulty:  Difficult
AACSB:  Information technology
LO:  5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

51) A digital certificate contains all of the following except the:

1. A) subject's private key.
2. B) subject's public key.
3. C) digital signature of the certification authority.
4. D) digital certificate serial number.

Answer:  A
Difficulty:  Difficult
AACSB:  Information technology
LO:  5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

52) Which of the following dimensions of e-commerce security is not provided for by encryption?

1. A) confidentiality
2. B) availability
3. C) message integrity
4. D) nonrepudiation

Answer:  B
Difficulty:  Difficult
AACSB:  Information technology
LO:  5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

53) All of the following are methods of securing channels of communication except:

1. A) SSL/TLS.
2. B) certificates.
3. C) VPN.
4. D) FTP.

Answer:  D
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.
54) A ________ is hardware or software that acts as a filter to prevent unwanted packets from entering a network.

1. A) firewall
2. B) virtual private network
3. C) proxy server
4. D) PPTP

Answer:  A
Difficulty:  Easy
AACSB:  Information technology
LO:  5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

55) Proxy servers are also known as:

1. A) firewalls.
2. B) application gateways.
3. C) dual home systems.
4. D) packet filters.

Answer:  C
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

56) All of the following are used for authentication except:

1. A) digital signatures.
2. B) certificates of authority.
3. C) biometric devices.
4. D) packet filters.

Answer:  D
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.


57) An intrusion detection system can perform all of the following functions except:

1. A) examining network traffic.
2. B) setting off an alarm when suspicious activity is detected.
3. C) checking network traffic to see if it matches certain patterns or preconfigured rules.
4. D) blocking suspicious activity.

Answer:  D
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.
58) Which of the following is not an example of an access control?

1. A) firewalls
2. B) proxy servers
3. C) digital signatures
4. D) login passwords

Answer:  C
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

59) Which of the following statements is not true?

1. A) A VPN provides both confidentiality and integrity.
2. B) A VPN uses both authentication and encryption.
3. C) A VPN uses a dedicated secure line.
4. D) The primary use of VPNs is to establish secure communications among business partners.

Answer:  C
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

60) Which of the following statements is not true?

1. A) Apple's Touch ID stores a user's actual fingerprint.
2. B) Biometric devices reduce the opportunity for spoofing.
3. C) A retina scan is an example of a biometric device.
4. D) Biometric data stored on an iPhone is encrypted.

Answer:  A
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.


61) A fingerprint scan is an example of which of the following?

1. A) biometrics
2. B) encryption
3. C) IDS
4. D) firewall

Answer:  A
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.
62) Which of the following is the most common protocol for securing a digital channel of communication?

1. A) DES
2. B) SSL/TLS
3. C) VPN
4. D) HTTP

Answer:  B
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

63) SLS/TLS cannot provide irrefutability.
Answer:  TRUE
Difficulty:  Difficult
AACSB:  Information technology
LO:  5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

64) The easiest and least expensive way to prevent threats to system integrity is to install anti-virus software.
Answer:  TRUE
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

65) Explain the difference between symmetric key cryptography and public key cryptography. Which dimensions of e-commerce security does encryption address?
Answer:  Symmetric key cryptography involves the use of a secret cipher that transforms plain text into cipher text. Both the sender and the receiver use the same key to encrypt and decrypt the message. The possibilities for simple substitution and transposition ciphers are endless, but there are several flaws in these types of systems that make them inadequate for use today. First, in order for the sender and the receiver to have the same key, it must be sent over a communication medium that is insecure or they must meet in person to exchange the key. If the secret key is lost or stolen, the encryption system fails. This method can be used effectively for data storage protection, but is less convenient for e-mail since the correspondents have to pass the secret key to one another over another secure medium prior to commencing the communication. Second, in the digital age, computers are so fast and powerful that these ancient encryption techniques can be quickly and easily broken. Modern digital encryption systems must use keys with between 56 and 512 binary digits in order to ensure that decryption would be unlikely. Third, for commercial use on an e-commerce site each of the parties in a transaction would need a secret key. In a population of millions of Internet users, thousands of millions of keys would be needed to accommodate all e-commerce customers.

Public key cryptography solves the problem of exchanging keys. In this method every user has a pair of numeric keys: private and public. The public key is not secret; on the contrary, it is supposed to be disseminated widely. Public keys may be published in company catalogs or on the World Wide Web. The public key is used by outside parties to encrypt the messages addressed to you. The private or secret key is used by the recipient to decipher incoming messages. The main advantage of a public key cryptographic system is its ability to begin secure correspondence over the Internet without prior exchanging of the keys and, therefore, without the need for a meeting in person or using conventional carriers for key exchange.

Encryption can provide four of the six key dimensions of e-commerce security. It can provide assurance that the message has not been altered (integrity), prevent the user from denying that he/she has sent the message (nonrepudiation), provide verification of the identity of the message (authentication), and give assurance that the message has not been read by others (confidentiality).
Difficulty:  Moderate
AACSB:  Analytical thinking; Information technology; Written and oral communication
LO:  5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

66) What dimensions do digital signatures and hash digests add to public key cryptography and how do they work?
Answer:  Digital signatures and hash digests can add authentication, nonrepudiation, and integrity when used with public key encryption. Encryption technology also allows for digital signatures and authentication. The sender encrypts the message yet again using their private key to produce a digital signature.

To check the confidentiality of a message and ensure it has not been altered in transit, a hash function is used first to create a digest of the message. A hash function is an algorithm that produces a fixed-length number called a hash or message digest. To ensure the authenticity of the message and to ensure nonrepudiation, the sender encrypts the entire block of cipher text one more time using the sender's private key. This produces a digital signature or "signed" cipher text. The result of this double encryption is sent over the Internet to the recipient. Then, the recipient first uses the sender's public key to authenticate the message. Once authenticated, the recipient uses his or her private key to obtain the hash result and original message. As a final step, the recipient applies the same hash function to the original text and compares the result with the result sent by the sender. If the results are the same, the recipient now knows the message has not been changed during transmission. The message has integrity.
Difficulty:  Difficult
AACSB:  Analytical thinking; Information technology; Written and oral communication
LO:  5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.
67) Discuss the security of communications channels. Include definitions and explanations for the terms Secure Sockets Layer/Transport Layer Security (SSL/TLS), secure negotiated session, session key, and VPN.
Answer:  The Secure Sockets Layer of the Transmission Control Protocol/Internet Protocol (TCP/IP) communications protocol is the main method for securing communications channels on the Web. When you receive a message from a Web server then you will be communicating through a secure channel; this means that SSL/TLS will be used to establish a secure negotiated session. A secure negotiated session is a client-server session in which the URL of the requested document, its contents, and the contents of the forms filled out by the user on the page, as well as the cookies that are exchanged, are all encrypted. The browser and the server exchange digital certificates with one another, determine the strongest shared form of encryption, and begin communicating using a unique symmetric encryption key, agreed upon for just this encounter. This is called a session key. SSL/TLS provides data encryption, server authentication, optional client authentication (as yet still rare for individual users), and message integrity for the TCP/IP connections between two computers.

SSL/TLS addresses the threat of authenticity by allowing users to verify another user's identity or the identity of a server. It also protects the integrity of the messages exchanged. However, once the merchant receives the encrypted credit and order information, that information is typically stored in unencrypted format on the merchant's servers. While SSL/TLS provides secure transactions between merchant and consumer, it only guarantees server-side authentication. Client authentication is optional. In addition, SSL/TLS cannot provide irrefutability – consumers can order goods or download information products and then claim the transaction never occurred.

Virtual private networks (VPNs) enable remote users to access an internal network from the Internet. They use protocols to create a private connection between a user on a local ISP and a private network. This process is called tunneling because it creates a private connection by adding an encrypted wrapper around the message to hide its content. It is called virtual because it appears to be a dedicated secure line when in fact it is a temporary secure line. VPNs are used primarily for transactions between business partners because dedicated connections can be very expensive. The Internet and VPNs can be used to significantly reduce the costs of secure communications.
Difficulty:  Moderate
AACSB:  Analytical thinking; Information technology; Written and oral communication
LO:  5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

68) What is the first step in developing an e-commerce security plan?

1. A) Create a security organization.
2. B) Develop a security policy.
3. C) Perform a risk assessment.
4. D) Perform a security audit.

Answer:  C
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.4: Appreciate the importance of policies, procedures, and laws in creating security.
69) To allow lower-level employees access to the corporate network while preventing them from accessing private human resources documents, you would use:

1. A) access controls.
2. B) an authorization management system.
3. C) security tokens.
4. D) an authorization policy.

Answer:  B
Difficulty:  Easy
AACSB:  Information technology
LO:  5.4: Appreciate the importance of policies, procedures, and laws in creating security.


70) Which of the following statements is not true?

1. A) A majority of states require companies that maintain personal data on their residents to publicly disclose when a security breach affecting those residents has occurred.
2. B) The USA Patriot Act broadly expanded law enforcement's investigative and surveillance powers.
3. C) The Cybersecurity Information Sharing Act is strongly supported by most large technology companies and privacy advocates.
4. D) The Federal Trade Commission has asserted that it has authority over corporations' data security practices.

Answer:  C
Difficulty:  Difficult
AACSB:  Application of knowledge
LO:  5.4: Appreciate the importance of policies, procedures, and laws in creating security.

71) All of the following are examples of social/mobile peer-to-peer payment systems except:

1. A) Venmo.
2. B) Bill Me Later.
3. C) Square Cash.
4. D) Google Wallet.

Answer:  B
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.5: Identify the major e-commerce payment systems in use today.

72) All of the following statements about Apple Pay are true except which of the following?

1. A) Apple Pay is available for both iPhone 5s and iPhone 6s.
2. B) Apple Pay is based on Touch ID biometric fingerprint scanning.
3. C) Apple Pay can be used for mobile payments at the point of sale at a physical store.
4. D) Apple Pay relies on NFC chip technology.

Answer:  A
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.5: Identify the major e-commerce payment systems in use today.
73) PayPal is an example of what type of payment system?

1. A) online stored value payment system
2. B) digital checking system
3. C) accumulating balance system
4. D) digital credit card system

Answer:  A
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.5: Identify the major e-commerce payment systems in use today.


74) PCI-DSS is a standard established by which of the following?

1. A) the banking industry
2. B) the credit card industry
3. C) the federal government
4. D) the retail industry

Answer:  B
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  5.5: Identify the major e-commerce payment systems in use today.

75) Which of the following is not a major trend in e-commerce payments in 2015-2016?

1. A) Mobile retail payment volume decreases.
2. B) PayPal remains the most popular alternative payment method.
3. C) Apple introduces Apple Pay.
4. D) Payment by credit and/or debit card remains the dominant form of online payment.

Answer:  A
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  5.5: Identify the major e-commerce payment systems in use today.

76) All of the following are limitations of the existing online credit card payment system except:

1. A) poor security.
2. B) cost to consumers.
3. C) cost to merchant.
4. D) social equity.

Answer:  B
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  5.5: Identify the major e-commerce payment systems in use today.

77) Linden Dollars, created for use in Second Life, are an example of:

1. A) digital cash.
2. B) virtual currency.
3. C) EBPP.
4. D) peer-to-peer payment systems.

Answer:  B
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.5: Identify the major e-commerce payment systems in use today.

78) Which of the following is a set of short-range wireless technologies used to share information among devices within about two inches of each other?

1. A) DES
2. B) NFC
3. C) IM
4. D) text messaging

Answer:  B
Difficulty:  Difficult
AACSB:  Information technology
LO:  5.5: Identify the major e-commerce payment systems in use today.

79) PayPal is the most popular alternative payment method in the United States.
Answer:  TRUE
Difficulty:  Easy
AACSB:  Application of knowledge
LO:  5.5: Identify the major e-commerce payment systems in use today.

80) Apple Pay uses near field communication (NFC) chips.
Answer:  TRUE
Difficulty:  Moderate
AACSB:  Application of knowledge
LO:  5.5: Identify the major e-commerce payment systems in use today.

81) Digital cash is legal tender that is instantly convertible into other forms of value without the intermediation of any third parties.
Answer:  FALSE
Difficulty:  Difficult
AACSB:  Information technology
LO:  5.5: Identify the major e-commerce payment systems in use today.

82) There is a finite number of Bitcoins that can be created.
Answer:  TRUE
Difficulty:  Moderate
AACSB:  Information technology
LO:  5.5: Identify the major e-commerce payment systems in use today.

83) Explain how an online credit card transaction works, identifying the parties involved and describing how SSL/TLS is involved. What are the limitations of online credit card payment systems?
Answer:  The five parties involved in a credit card transaction are the consumer, the merchant, the clearinghouse, the merchant bank (acquiring bank), and the consumer's card issuing bank. The basic payment transaction process works like this: The consumer first makes an online payment by sending his or her credit card information via an online form at the merchant's Web site. Once this information is received by the merchant, the merchant software contacts a clearinghouse (a financial intermediary that authenticates credit cards and verifies account balances). The clearinghouse contacts the card issuing bank to verify the account information. Once verified, the issuing bank credits the account of the merchant at the merchant's bank. The debit to the consumer account is transmitted to the consumer in a monthly statement. SSL is involved in sending the consumer's credit card information safely to the merchant's Web site. When the consumer checks out using the merchant's shopping cart software, a secure tunnel through the Internet is created using SSL/TLS. Using encryption, SSL/TSL secures the session during which credit card information will be sent to the merchant and protects the information from interlopers on the Internet.

There are a number of limitations to the existing credit card payment system, most importantly involving security, merchant risk, cost, and social equity. The security of the transaction is considered to be very poor because neither the merchant nor the consumer can be fully authenticated. The risks merchants face is high. Banks think of Internet credit card orders as the same type of transactions as mail orders or telephone orders. In these transactions, the credit card is not present. There is no way for the merchant to verify the legitimacy of the customer's card or identity before confirming the order. In these transactions, the merchant carries all the risk for fraudulent credit card use. Consumers can disclaim charges even though the items have already been shipped. Merchants also must pay significant charges. These high costs make it unprofitable to sell small items such as individual articles or music tracks over the Internet. Furthermore, credit cards are not very democratic. Millions of young adults and other adult Americans who cannot afford credit cards or who have low incomes and are, therefore, considered poor credit risks cannot participate in e-commerce as it is presently structured in the United States.
Difficulty:  Moderate
AACSB:  Analytical thinking; Information technology; Written and oral communication
LO:  5.5: Identify the major e-commerce payment systems in use today.

84) In 2014, online bill payment accounted for ________ of all bill payments, while paper checks accounted for ________.

1. A) less than 10%; less than 25%
2. B) about 25%; about 10%
3. C) more than 50%; less than 25%
4. D) 100%; 0%

Answer:  C
Difficulty:  Difficult
AACSB:  Information technology
LO:  5.6: Describe the features and functionality of electronic billing presentment and payment systems.
85) Define and explain how EBPP systems work. Describe each of the main EBPP business models.
Answer:  EBPP refers to electronic billing presentment and payment systems, which are forms of online payment systems for monthly bills. Analysts expect electronic bill presentment and payment to become one of the fastest growing e-commerce businesses in the United States over the next several years because everyone involved stands to benefit from the process. Billers will cut costs by eliminating printing, paper, envelopes, postage, and the processing of paper checks and payments. Furthermore, EBPP will offer billers an opportunity to enhance customer service and target market. Customers will save time and eliminate checks and postage. Companies can use EBPP to present bills to individual customers electronically or they can contract with a service to handle all billing and payment collection for them. There are two main types of EBPP business models: biller-direct and consolidator. In biller-direct systems, a biller delivers the bill to customers via its own Web site or via a third-party's site. A service bureau is often used to provide the necessary infrastructure. The second major type of EBPP business model is the consolidator model. In this model, a third party, such as a financial institution or portal, aggregates all bills for consumers and ideally permits one-stop bill payment (pay anyone).
Difficulty:  Moderate
AACSB:  Analytical thinking; Information technology; Written and oral communication
LO:  5.6: Describe the features and functionality of electronic billing presentment and payment systems.