Question 1

Which of the following best defines the term "proxy"?

Accepted Answer

A)  It is a document that entitles its owner to special preferences relating either to dividends or to the distribution of assets. 
B)  It is a document that entitles its owner to vote for a corporation's board of directors, receive dividends, and participate in the net assets upon liquidation of the corporation. 
C)  It is a document authorizing its holder to purchase a stated number of shares of stock at a stated price, usually for a stated period of time. 
D)  It is a document by which shareholders can transfer their rights to vote at a shareholders' meeting to a second party. 
A)  It is a document that entitles its owner to special preferences relating either to dividends or to the distribution of assets. 
B)  It is a document that entitles its owner to vote for a corporation's board of directors, receive dividends, and participate in the net assets upon liquidation of the corporation. 
C)  It is a document authorizing its holder to purchase a stated number of shares of stock at a stated price, usually for a stated period of time. 
D)  It is a document by which shareholders can transfer their rights to vote at a shareholders' meeting to a second party. D

Question 2

Dividend payments made to owners under equity financing are tax deductible, whereas interest payments on debt securities are not.

Accepted Answer

A) True 
 B)False  False

Question 3

Which of the following statements is true of a Subchapter S corporation?

Accepted Answer

A)  It is taxed like a publicly held corporation. 
B)  It is organized and operated as a general partnership. 
C)  It is taxed like a partnership. 
D)  It is organized and operated as a limited liability partnership. 
A)  It is taxed like a publicly held corporation. 
B)  It is organized and operated as a general partnership. 
C)  It is taxed like a partnership. 
D)  It is organized and operated as a limited liability partnership. C

Question 4

Which of the following is an incorrect statement regarding limited liability company characteristics?

Accepted Answer

A)  An LLC can sue or be sued. 
B)  An LLC can be found civilly and criminally liable. 
C)  LLC members have unlimited liability for LLC debts. 
D)  The LLC is a separate legal person under state law. 
A)  An LLC can sue or be sued. 
B)  An LLC can be found civilly and criminally liable. 
C)  LLC members have unlimited liability for LLC debts. 
D)  The LLC is a separate legal person under state law.

Question 5

Each of the fifty states has a general incorporation statute that stipulates the articles of incorporation to be used in that state.

Accepted Answer

A) True 
 B)False

Question 6

Which class of stock entitles its owner to vote for a corporation's board of directors, receive dividends, and participate in the net assets upon liquidation of the corporation?

Accepted Answer

A)  preferred stock 
B)  privileged stock 
C)  common stock 
D)  convertible stock 
A)  preferred stock 
B)  privileged stock 
C)  common stock 
D)  convertible stock

Question 7

The limited liability company (LLC) allows entrepreneurs and small business owners to enjoy the same limited personal liability that shareholders in a corporation have while retaining the status of partners in a partnership.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is true of the Greek bailout in 2010?

Accepted Answer

A)  The exposure of foreign banks and other institutions was the smallest in France, Germany, Britain, the Netherlands, Italy, and Belgium. 
B)  The European Central Bank (EC
B)  joined with the International Monetary Fund (IMF) to offer $1 trillion in loan guarantees to Europe's banks. 
C)  The private- and public-sector banks and other institutions of Europe and the United States lent money only to one another. 
D)  The U.S. dollar fell dramatically, and the euro became a safe haven. 
A)  The exposure of foreign banks and other institutions was the smallest in France, Germany, Britain, the Netherlands, Italy, and Belgium. 
B)  The European Central Bank (EC
B)  joined with the International Monetary Fund (IMF) to offer $1 trillion in loan guarantees to Europe's banks. 
C)  The private- and public-sector banks and other institutions of Europe and the United States lent money only to one another. 
D)  The U.S. dollar fell dramatically, and the euro became a safe haven.

Question 9

Which class of stock entitles its owner to special options relating either to dividends or to the distribution of assets?

Accepted Answer

A)  preferred stock 
B)  privileged stock 
C)  common stock 
D)  limited stock 
A)  preferred stock 
B)  privileged stock 
C)  common stock 
D)  limited stock

Question 10

A corporation formed in one country but doing business in the United States is referred to in the United States as a(n) corporation.

Accepted Answer

A)  domestic 
B)  alien 
C)  foreign 
D)  Subchapter S 
A)  domestic 
B)  alien 
C)  foreign 
D)  Subchapter S

Question 11

The owners of a limited liability company are called .

Accepted Answer

A)  members 
B)  shareholders 
C)  officers 
D)  directors 
A)  members 
B)  shareholders 
C)  officers 
D)  directors

Question 12

Steps involved in creating a limited liability company include all but which of the following?

Accepted Answer

A)  Choose a state where the LLC will be doing most of its business. 
B)  Select a name. 
C)  Deliver articles of organization to the secretary of state. 
D)  File a partnership agreement with the secretary of state. 
A)  Choose a state where the LLC will be doing most of its business. 
B)  Select a name. 
C)  Deliver articles of organization to the secretary of state. 
D)  File a partnership agreement with the secretary of state.

Question 13

Which of the following is true of a corporation?

Accepted Answer

A)  It is the least dominant form of business organization. 
B)  It can only be created by federal law. 
C)  It is legally treated as a single person. 
D)  It is legally owned by only one person. 
A)  It is the least dominant form of business organization. 
B)  It can only be created by federal law. 
C)  It is legally treated as a single person. 
D)  It is legally owned by only one person.

Question 14

Buyback programs are used to prevent stock options and the new shares resulting from the exercise of options from diluting stock prices and earnings per share.

Accepted Answer

A) True 
 B)False

Question 15

A long-term corporate loan secured by a lien on corporate assets is called a .

Accepted Answer

A)  bond 
B)  note 
C)  debenture 
D)  share 
A)  bond 
B)  note 
C)  debenture 
D)  share

Question 16

Which of the following statements is true when creating a corporation in the United States?

Accepted Answer

A)  Each of the 50 states has a general incorporation statute that stipulates the articles of incorporation to be used in that state. 
B)  Incorporation is a federal matter and requires the recording of articles of incorporation with the U.S. Secretary of State. 
C)  Corporations cannot be created without the enactment of a local ordinance in the city or county where the corporate headquarters is to be located. 
D)  Corporations are created by private agreement and do not require the filing of any documents with a government official. 
A)  Each of the 50 states has a general incorporation statute that stipulates the articles of incorporation to be used in that state. 
B)  Incorporation is a federal matter and requires the recording of articles of incorporation with the U.S. Secretary of State. 
C)  Corporations cannot be created without the enactment of a local ordinance in the city or county where the corporate headquarters is to be located. 
D)  Corporations are created by private agreement and do not require the filing of any documents with a government official.

Question 17

Which of the following is true of shareholders?

Accepted Answer

A)  They can select the board of directors who will set corporate policy. 
B)  They have direct control over the corporation's operation. 
C)  They do not have any right to vote. 
D)  They are not the owners of the corporation. 
A)  They can select the board of directors who will set corporate policy. 
B)  They have direct control over the corporation's operation. 
C)  They do not have any right to vote. 
D)  They are not the owners of the corporation.

Question 18

List and describe the various types of bonds.

Accepted Answer

The various types of bonds include: a) s

Question 19

If a corporation issues shares for less than the stated value, it remains liable to the shareholder for the difference between the stated value and the amount of consideration actually paid.

Accepted Answer

A) True 
 B)False

Question 20

A corporation is legally treated as a single person.

Accepted Answer

A) True 
 B)False

Exam 17: Law and Business Associations II

Which of the following best defines the term "proxy"?

Dividend payments made to owners under equity financing are tax deductible, whereas interest payments on debt securities are not.

Which of the following statements is true of a Subchapter S corporation?

Which of the following is an incorrect statement regarding limited liability company characteristics?

Each of the fifty states has a general incorporation statute that stipulates the articles of incorporation to be used in that state.

Which class of stock entitles its owner to vote for a corporation's board of directors, receive dividends, and participate in the net assets upon liquidation of the corporation?

The limited liability company (LLC) allows entrepreneurs and small business owners to enjoy the same limited personal liability that shareholders in a corporation have while retaining the status of partners in a partnership.

Which of the following is true of the Greek bailout in 2010?

Which class of stock entitles its owner to special options relating either to dividends or to the distribution of assets?

A corporation formed in one country but doing business in the United States is referred to in the United States as a(n) corporation.

The owners of a limited liability company are called .

Steps involved in creating a limited liability company include all but which of the following?

Which of the following is true of a corporation?

Buyback programs are used to prevent stock options and the new shares resulting from the exercise of options from diluting stock prices and earnings per share.

A long-term corporate loan secured by a lien on corporate assets is called a .

Which of the following statements is true when creating a corporation in the United States?

Which of the following is true of shareholders?

List and describe the various types of bonds.

If a corporation issues shares for less than the stated value, it remains liable to the shareholder for the difference between the stated value and the amount of consideration actually paid.

A corporation is legally treated as a single person.

Critical Thinking and Legal Reasoning

Introduction to Law and the Legal Environment of Business

The American Legal System

Alternative Tools of Dispute Resolution

Constitutional Principles

White-Collar Crime and the Business Community

Ethics, Social Responsibility, and the Business Manager

The International Legal Environment of Business

The Law of Contracts and Sales I

The Law of Contracts and Sales Ii

The Law of Torts

Product and Service Liability Law

Law of Property: Real and Personal

Intellectual Property

Agency Law

Law and Business Associations I

The Law of Administrative Agencies

The Employment Relationship and Immigration Laws

Laws Governing Labor-Management Relations

Employment Discrimination

Environmental Law

Rules Governing the Issuance and Trading of Securities

Antitrust Laws

Laws of Debtor-Creditor Relations and Consumer Protection

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