Question 1

Quick Supply House breached a contract with MegaCorp. The breach resulted in the loss of a great deal of money to MegaCorp. The board of directors for MegaCorp vote not to sue the supply house since it believes the legal costs would be more than it would probably recover. If a group of shareholders wish to sue the supply house, this would

Accepted Answer

A)  be a type of direct lawsuit.
B)  have to be a derivative lawsuit.
C)  be a settlement lawsuit.
D)  be an SEC lawsuit.E) A) and C)
F) None of the above

Question 2

Mike is planning on incorporating his business in the state of Delaware. Which of the following regarding the name of Mike's business is TRUE?

Accepted Answer

A)  He will be able to use the words "Association" or "Institute" in his company name.
B)  He will not be able to use abbreviations (such as Inc. or Corp.) in his company name.
C)  His company name will not have to include one of the following words: Corporation, Incorporated, Company or Limited.
D)  His company name can be the same as another corporation that already exists in Delaware.E) None of the above
F) All of the above

Question 3

The person who creates a corporation is called the

Accepted Answer

A)  promoter.
B)  partner.
C)  agent.
D)  incorporator.E) A) and B)
F) All of the above

Question 4

Courts are sympathetic to managers acting in the best interests of the corporation, even when the acts are illegal.

Accepted Answer

A) True 
 B)False

Question 5

Who signs the charter and files it with the secretary of state?

Accepted Answer

A)  the incorporator
B)  the chairman of the board
C)  the promotor
D)  the company presidentE) All of the above
F) None of the above

Question 6

Which of the following is the most appropriate term to use when describing management's duty to its shareholders?

Accepted Answer

A)  official duty
B)  legal duty
C)  fiduciary duty
D)  statutory dutyE) B) and C)
F) A) and D)

Question 7

Under the Model Act, a corporation must have at least one director unless all shareholders agree to eliminate the board or the corporation has fewer than _____ shareholders.

Accepted Answer

A)  10
B)  25
C)  50
D)  100E) All of the above
F) A) and C)

Question 8

Discuss how a corporation is terminated.

Accepted Answer

Ordinarily, terminating a corporation is...

Question 9

The executives of Jornaginn Corporation have decided they need to sell 50,000 additional shares of stock to finance their expansion plans. The executives

Accepted Answer

A)  cannot sell that many shares unless they were authorized initially in the corporate charter.
B)  can sell as many shares as the market will bear.
C)  are limited by the number of shares authorized in the corporate charter, but this number can be increased by amending the charter and paying a fee.
D)  can sell the shares only if the shares have a par value which is close to the current market price.E) None of the above
F) B) and C)

Question 10

If a court determines that a manager's corporate decision amounted to self-dealing,

Accepted Answer

A)  the business judgment rule will not apply.
B)  the transaction being challenged will be automatically voided.
C)  the manager is automatically personally liable to the corporation.
D)  the manager will automatically be fired.E) None of the above
F) A) and B)

Question 11

Who elects the officers of a corporation?

Accepted Answer

A)  the agents
B)  the shareholders
C)  the incorporators
D)  the directorsE) A) and D)
F) C) and D)

Question 12

Discuss the purposes of the business judgment rule.

Accepted Answer

The business judgment rule is designed t...

Question 13

A director violates the corporate opportunity doctrine if he or she competes with the corporation, unless the disinterested directors approve of the director's actions.

Accepted Answer

A) True 
 B)False

Question 14

When can shareholders sue a corporation directly?

Accepted Answer

A)  only if their own rights have been violated
B)  only if the corporation has been wronged
C)  only if they hold at least 10 percent of company stock
D)  at any time they wishE) All of the above
F) C) and D)

Question 15

All of the following are shareholder rights EXCEPT

Accepted Answer

A)  the right to manage the firm.
B)  the right to vote.
C)  the right to information.
D)  the right to dissent.E) C) and D)
F) B) and D)

Question 16

The lawyer who forms the corporation cannot legally serve as its incorporator.

Accepted Answer

A) True 
 B)False

Question 17

Carey decided to incorporate her business under the name yStar Inc. Before yStar was incorporated, Carey signed a contract in the name of yStar, Inc. to have some office space remodeled. Which statement is correct?

Accepted Answer

A)  yStar is liable on the contract because the contract was signed in its name.
B)  yStar becomes liable on the contract as soon as it is incorporated.
C)  yStar is liable on the contract if the contractor knows that the corporation does not yet exist.
D)  yStar will be liable on the contract only if the corporation adopts the contract.E) C) and D)
F) A) and C)

Question 18

A derivative lawsuit is filed by a shareholder of the corporation if his or her own rights have been harmed.

Accepted Answer

A) True 
 B)False

Question 19

A "fundamental change" in a corporation would be illustrated by

Accepted Answer

A)  E-prise, Inc. merging with Vitta Corporation.
B)  E-prise electing new members to the board.
C)  Vitta Corporation adding a new product to its product line.
D)  Vitta Corporation setting the date for its annual meeting.E) None of the above
F) A) and C)

Question 20

Overall, directors get paid very little for the amount of work they perform.

Accepted Answer

A) True 
 B)False

Exam 21: Corporations

All of the following are shareholder rights EXCEPT

Correct Answer
verified

If a court determines that a manager's corporate decision amounted to self-dealing,

Correct Answer
verified

Correct Answer
verified

The lawyer who forms the corporation cannot legally serve as its incorporator.

Correct Answer
verified

Discuss the purposes of the business judgment rule.

Correct Answer
verified
The business judgment rule is designed t...
View Answer

Courts are sympathetic to managers acting in the best interests of the corporation, even when the acts are illegal.

Correct Answer
verified

When can shareholders sue a corporation directly?

Correct Answer
verified

Who elects the officers of a corporation?

Correct Answer
verified

A derivative lawsuit is filed by a shareholder of the corporation if his or her own rights have been harmed.

Correct Answer
verified

The person who creates a corporation is called the

Correct Answer
verified

The executives of Jornaginn Corporation have decided they need to sell 50,000 additional shares of stock to finance their expansion plans. The executives

Correct Answer
verified

Who signs the charter and files it with the secretary of state?

Correct Answer
verified

Discuss how a corporation is terminated.

Correct Answer
verified
Ordinarily, terminating a corporation is...
View Answer

Overall, directors get paid very little for the amount of work they perform.

Correct Answer
verified

Carey decided to incorporate her business under the name yStar Inc. Before yStar was incorporated, Carey signed a contract in the name of yStar, Inc. to have some office space remodeled. Which statement is correct?

Correct Answer
verified

Mike is planning on incorporating his business in the state of Delaware. Which of the following regarding the name of Mike's business is TRUE?

Correct Answer
verified

Under the Model Act, a corporation must have at least one director unless all shareholders agree to eliminate the board or the corporation has fewer than _____ shareholders.

Correct Answer
verified

A director violates the corporate opportunity doctrine if he or she competes with the corporation, unless the disinterested directors approve of the director's actions.

Correct Answer
verified

Which of the following is the most appropriate term to use when describing management's duty to its shareholders?

Correct Answer
verified

A "fundamental change" in a corporation would be illustrated by

Correct Answer
verified

Exam 21: Corporations

All of the following are shareholder rights EXCEPT

Correct AnswerverifiedShow Answer

If a court determines that a manager's corporate decision amounted to self-dealing,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The lawyer who forms the corporation cannot legally serve as its incorporator.

Correct AnswerverifiedShow Answer

Discuss the purposes of the business judgment rule.

Correct AnswerverifiedThe business judgment rule is designed t...View AnswerShow Answer

Courts are sympathetic to managers acting in the best interests of the corporation, even when the acts are illegal.

Correct AnswerverifiedShow Answer

When can shareholders sue a corporation directly?

Correct AnswerverifiedShow Answer

Who elects the officers of a corporation?

Correct AnswerverifiedShow Answer

A derivative lawsuit is filed by a shareholder of the corporation if his or her own rights have been harmed.

Correct AnswerverifiedShow Answer

The person who creates a corporation is called the

Correct AnswerverifiedShow Answer

The executives of Jornaginn Corporation have decided they need to sell 50,000 additional shares of stock to finance their expansion plans. The executives

Correct AnswerverifiedShow Answer

Who signs the charter and files it with the secretary of state?

Correct AnswerverifiedShow Answer

Discuss how a corporation is terminated.

Correct AnswerverifiedOrdinarily, terminating a corporation is...View AnswerShow Answer

Overall, directors get paid very little for the amount of work they perform.

Correct AnswerverifiedShow Answer

Carey decided to incorporate her business under the name yStar Inc. Before yStar was incorporated, Carey signed a contract in the name of yStar, Inc. to have some office space remodeled. Which statement is correct?

Correct AnswerverifiedShow Answer

Mike is planning on incorporating his business in the state of Delaware. Which of the following regarding the name of Mike's business is TRUE?

Correct AnswerverifiedShow Answer

Under the Model Act, a corporation must have at least one director unless all shareholders agree to eliminate the board or the corporation has fewer than _____ shareholders.

Correct AnswerverifiedShow Answer

A director violates the corporate opportunity doctrine if he or she competes with the corporation, unless the disinterested directors approve of the director's actions.

Correct AnswerverifiedShow Answer

Which of the following is the most appropriate term to use when describing management's duty to its shareholders?

Correct AnswerverifiedShow Answer

A "fundamental change" in a corporation would be illustrated by

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The business judgment rule is designed t...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Ordinarily, terminating a corporation is...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified