Question 1

Even if it has been lawfully and properly declared, a stock dividend may be revoked unless it has been actually distributed.

Accepted Answer

A) True 
 B)False  True

Question 2

Preemptive rights are shareholders' rights to purchase a proportionate part of a new issue of stock.

Accepted Answer

A) True 
 B)False  True

Question 3

50. When the articles provide a , preferred stock has priority over common stock to the extent the articles state
After a corporation is dissolved and when assets are distributed.

Accepted Answer

A)  stock right 
B)  liquidation preference 
C)  dividend preference 
D)  preemptive right 
A)  stock right 
B)  liquidation preference 
C)  dividend preference 
D)  preemptive right B

Question 4

Debentures are the same as indentures.

Accepted Answer

A) True 
 B)False

Question 5

Under the RMBCA, if the charter states that "the corporation elects to have preemptive rights," shareholders have preemptive rights with respect to:

Accepted Answer

A)  shares issued as compensation to directors, officers, and employees. 
B)  shares issued within six months of incorporation. 
C)  shares issued for consideration other than money. 
D)  unissued shares. 
A)  shares issued as compensation to directors, officers, and employees. 
B)  shares issued within six months of incorporation. 
C)  shares issued for consideration other than money. 
D)  unissued shares.

Question 6

An investor has the right to transfer investment securities by sale, but not by gift or pledge.

Accepted Answer

A) True 
 B)False

Question 7

The shareholders normally determine the price for which shares will be issued unless the charter permits the board of directors to set the price.

Accepted Answer

A) True 
 B)False

Question 8

The RMBCA has adopted a net assets test for the issuance of dividends.

Accepted Answer

A) True 
 B)False

Question 9

Two principal sources for corporate financing are debt and equity investment securities.

Accepted Answer

A) True 
 B)False

Question 10

Warrick makes a $10,000 investment in a debenture issued by F & M Company. Warrick is now a secured creditor of F & M Company.

Accepted Answer

A) True 
 B)False

Question 11

If no exemption is available, a corporation offering shares of stock for sale is subject to court injunction and civil liability in damages to persons to whom securities are sold in violation of the regulatory statute, but there is no potential criminal liability.

Accepted Answer

A) True 
 B)False

Question 12

What is the principal source for corporate financing?

Accepted Answer

A)  Debt 
B)  Equity investment securities 
C)  Both of these. 
D)  None of these. 
A)  Debt 
B)  Equity investment securities 
C)  Both of these. 
D)  None of these.

Question 13

The difference between common and preferred stock is that the latter is a debt instrument, whereas the former represents an equity interest in the company.

Accepted Answer

A) True 
 B)False

Question 14

Walker recently purchased 1,000 shares of Heights Corp. stock, but now receives additional 100 shares of Heights stock, which represent a ratable distribution of additional shares by the corporation. Walker's receipt of additional shares is a:

Accepted Answer

A)  property dividend. 
B)  liquidated dividend. 
C)  convertible dividend. 
D)  stock dividend. 
A)  property dividend. 
B)  liquidated dividend. 
C)  convertible dividend. 
D)  stock dividend.

Question 15

A corporate bond creates a debtor-creditor relationship between the corporation and the holder of the security.

Accepted Answer

A) True 
 B)False

Question 16

Allen owns 500 of the 5,000 shares outstanding of General Myopics. GM plans to issue 600 new shares. If Allen has preemptive rights, he may buy:

Accepted Answer

A)  all 600 shares before anyone else. 
B)  600 shares at the same price he paid for the other stock. 
C)  6 shares at a discount of 10%. 
D)  None of these. 
A)  all 600 shares before anyone else. 
B)  600 shares at the same price he paid for the other stock. 
C)  6 shares at a discount of 10%. 
D)  None of these.

Question 17

Shareholders have residual authority over increases in the amount of authorized capital stock.

Accepted Answer

A) True 
 B)False

Question 18

The Ajax Corporation issues bonds that pay a minimum of 6% interest but that can pay more if corporate earnings reach certain specified levels. In lieu of payment under this bond, a holder may exchange it for stock of the corporation. This bond would be a:

Accepted Answer

A)  callable income bond. 
B)  convertible participating bond. 
C)  convertible unsecured bond. 
D)  convertible secured bond. 
A)  callable income bond. 
B)  convertible participating bond. 
C)  convertible unsecured bond. 
D)  convertible secured bond.

Question 19

Harry bought preferred noncumulative stock on which there were no dividends declared for the year. The dividends that were not declared for the year will:

Accepted Answer

A)  be paid the next year. 
B)  be paid upon the next declaration of dividends. 
C)  be paid out of the common stock dividend fund. 
D)  not be paid. 
A)  be paid the next year. 
B)  be paid upon the next declaration of dividends. 
C)  be paid out of the common stock dividend fund. 
D)  not be paid.

Question 20

The Revised Act does not consider a stock dividend issued by ZYX Corporation to its stockholders a distribution.

Accepted Answer

A) True 
 B)False

Exam 34: Financial Structure

Even if it has been lawfully and properly declared, a stock dividend may be revoked unless it has been actually distributed.

Preemptive rights are shareholders' rights to purchase a proportionate part of a new issue of stock.

50. When the articles provide a , preferred stock has priority over common stock to the extent the articles state After a corporation is dissolved and when assets are distributed.

Debentures are the same as indentures.

Under the RMBCA, if the charter states that "the corporation elects to have preemptive rights," shareholders have preemptive rights with respect to:

An investor has the right to transfer investment securities by sale, but not by gift or pledge.

The shareholders normally determine the price for which shares will be issued unless the charter permits the board of directors to set the price.

The RMBCA has adopted a net assets test for the issuance of dividends.

Two principal sources for corporate financing are debt and equity investment securities.

Warrick makes a $10,000 investment in a debenture issued by F & M Company. Warrick is now a secured creditor of F & M Company.

If no exemption is available, a corporation offering shares of stock for sale is subject to court injunction and civil liability in damages to persons to whom securities are sold in violation of the regulatory statute, but there is no potential criminal liability.

What is the principal source for corporate financing?

The difference between common and preferred stock is that the latter is a debt instrument, whereas the former represents an equity interest in the company.

Walker recently purchased 1,000 shares of Heights Corp. stock, but now receives additional 100 shares of Heights stock, which represent a ratable distribution of additional shares by the corporation. Walker's receipt of additional shares is a:

A corporate bond creates a debtor-creditor relationship between the corporation and the holder of the security.

Allen owns 500 of the 5,000 shares outstanding of General Myopics. GM plans to issue 600 new shares. If Allen has preemptive rights, he may buy:

Shareholders have residual authority over increases in the amount of authorized capital stock.

The Ajax Corporation issues bonds that pay a minimum of 6% interest but that can pay more if corporate earnings reach certain specified levels. In lieu of payment under this bond, a holder may exchange it for stock of the corporation. This bond would be a:

Harry bought preferred noncumulative stock on which there were no dividends declared for the year. The dividends that were not declared for the year will:

The Revised Act does not consider a stock dividend issued by ZYX Corporation to its stockholders a distribution.

Introduction to Law

Business Ethics and the Social Responsibility of Business

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance, Breach, and Discharge

Contract Remedies

Relationship of Principal and Agent

Relationship With Third Parties

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Products Liability: Warranties and Strict Liability in Tort

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transfers

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature, Formation, and Powers

Management Structure

Fundamental Changes

Secured Transactions and Suretyship

Bankruptcy

Protection of Intellectual Property

Antitrust

Consumer Protection

Employment Law

Securities Regulation

Accountants Legal Liability

Environmental Law

International Business Law

Introduction to Property, Property Insurance, Bailments, and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Decedents Estates

the Legal Environment of Business

Contracts

Agency

Sales

Negotiable Instruments

Unincorporated Business Associations

Corporations

Debtor and Creditor Relations

Regulation of Business

Property

₅₀_._Whe_n_th_e_article_s_provid_e_a _,_preferre_d_stoc_k_ha_s_priorit_y_ove_r_commo_n_stoc_k_t_o_th_e_exten_t_th_e_article_s_state After a corporation is dissolved and when assets are distributed.