Question 1

Preemptive rights are:

Accepted Answer

A)  not legal in the majority of states. 
B)  designed to prevent dilution of a shareholder's ownership in the company. 
C)  required to be offered to shareholders by the Model Act. 
D)  designed to indemnify managers who act in good faith. 
A)  not legal in the majority of states. 
B)  designed to prevent dilution of a shareholder's ownership in the company. 
C)  required to be offered to shareholders by the Model Act. 
D)  designed to indemnify managers who act in good faith. B

Question 2

Sara decided to incorporate her business under the name Gomo,Inc.Before Gomo was incorporated,Sara signed a contract in the name of Gomo,Inc.to lease a store front.Sara did not tell the other party that Gomo was not yet formed.Sara is personally liable on the lease.

Accepted Answer

A) True 
 B)False  True

Question 3

Hank owns 100 shares of cumulative preferred stock in Wayside Transport,Inc.Kelsey owns 50 non-cumulative preferred shares,and Oleg owns 120 shares of common stock.Wayside does not pay dividends in 2007.In 2009:

Accepted Answer

A)  Hank and Kelsey must receive their 2009 dividends before Oleg is paid any 2009 dividends. 
B)  Oleg cannot receive any 2009 dividends until Hank is paid for the 2007 dividends. 
C)  Kelsey cannot receive the dividends Wayside could not afford to pay in 2007. She will just lose them. 
D)  All of the above. 
A)  Hank and Kelsey must receive their 2009 dividends before Oleg is paid any 2009 dividends. 
B)  Oleg cannot receive any 2009 dividends until Hank is paid for the 2007 dividends. 
C)  Kelsey cannot receive the dividends Wayside could not afford to pay in 2007. She will just lose them. 
D)  All of the above. D

Question 4

Common stock is last stock in line for any corporate payouts,including dividends and liquidation payments.

Accepted Answer

A) True 
 B)False

Question 5

Incorporation protects:

Accepted Answer

A)  shareholders against personal liability for the debts of the company. 
B)  anyone involved in management of the business against personal liability for wrongdoing. 
C)  the public from wrongdoing by either the shareholders or the management of the corporation. 
D)  All the above are correct. 
A)  shareholders against personal liability for the debts of the company. 
B)  anyone involved in management of the business against personal liability for wrongdoing. 
C)  the public from wrongdoing by either the shareholders or the management of the corporation. 
D)  All the above are correct.

Question 6

A corporation must have a registered agent within the state of incorporation only if the corporation maintains an office in that state.

Accepted Answer

A) True 
 B)False

Question 7

MegaCorp purchased 10,000 shares of its own stock that had previously been owned by private investors.The stock MegaCorp repurchased is called:

Accepted Answer

A)  authorized and unissued. 
B)  authorized and issued. 
C)  treasury stock. 
D)  repurchased stock. 
A)  authorized and unissued. 
B)  authorized and issued. 
C)  treasury stock. 
D)  repurchased stock.

Question 8

Incorporators of Maizey Co.signed and delivered the corporate charter to the proper office,but due to inefficiencies in the government office,the filing was delayed.During the period between the delivery of the charter and the filing,a promoter of Maizey Co.entered a contract for the delivery of goods using the corporate name.The supplier,if it finds out the filing had not been completed when the contract was entered,may hold the promoter personally liable on the contract.

Accepted Answer

A) True 
 B)False

Question 9

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. 
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.

Question 10

MegaCorp has five directors.The company has 1,050 shares of voting stock.Jessica would like to purchase enough stock to elect herself to the board of directors.The company allows for cumulative voting.Explain the concept of cumulative voting and also state how many shares of MegaCorp stock Jessica will need to own to assure herself a place on the board of directors.

Accepted Answer

Cumulative voting allows a shareholder t

Question 11

Under most state statutes,a corporation may:

Accepted Answer

A)  include in its charter a provision indemnifying directors unless they have engaged in intentional misconduct or bad faith. 
B)  include in its charter a provision indemnifying directors under any circumstances in the conduct of their duties for the corporation. 
C)  not include in its charter a provision indemnifying directors who engage in negligent conduct of their duties. 
D)  not include in its charter any provisions regarding indemnification of directors. 
A)  include in its charter a provision indemnifying directors unless they have engaged in intentional misconduct or bad faith. 
B)  include in its charter a provision indemnifying directors under any circumstances in the conduct of their duties for the corporation. 
C)  not include in its charter a provision indemnifying directors who engage in negligent conduct of their duties. 
D)  not include in its charter any provisions regarding indemnification of directors.

Question 12

Identify four circumstances that might persuade a court to pierce the corporate veil.

Accepted Answer

Courts generally pierce the corporate ve

Question 13

Discuss how a corporation is terminated.

Accepted Answer

Ordinarily,terminating a corporation is

Question 14

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. 
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.

Question 15

A business corporation can be incorporated under either state law or federal law.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is correct?

Accepted Answer

A)  Bonds are long-term debt secured by company assets. 
B)  Debentures are long-term unsecured debt. 
C)  Notes are short-term debt and may be secured or unsecured. 
D)  All the above are correct. 
A)  Bonds are long-term debt secured by company assets. 
B)  Debentures are long-term unsecured debt. 
C)  Notes are short-term debt and may be secured or unsecured. 
D)  All the above are correct.

Question 17

What are some of the advantages for a business to incorporate in Delaware?

Accepted Answer

Delaware offers corporations several adv

Question 18

A corporate charter is filed with:

Accepted Answer

A)  a state's Secretary of State office. 
B)  a state's Treasury and/or Revenue Division. 
C)  the United States Department of Commerce. 
D)  All the above. 
A)  a state's Secretary of State office. 
B)  a state's Treasury and/or Revenue Division. 
C)  the United States Department of Commerce. 
D)  All the above.

Question 19

Defining a corporation with such information as the corporate name,the number and type of authorized shares of stock,identification of the purpose and the agent,is done through the:

Accepted Answer

A)  charter. 
B)  articles of incorporation. 
C)  certificate of organization. 
D)  All of the above. All of these terms are used to identify the same document. 
A)  charter. 
B)  articles of incorporation. 
C)  certificate of organization. 
D)  All of the above. All of these terms are used to identify the same document.

Question 20

MegaCorp is incorporated under Delaware law.It is registered to do business in New York.Legally,in New York MegaCorp is known as what kind of corporation?

Accepted Answer

A)  Domestic. 
B)  Foreign. 
C)  Alien. 
D)  Cumulative. 
A)  Domestic. 
B)  Foreign. 
C)  Alien. 
D)  Cumulative.

Exam 33: Life And Death Of A Corporation

Preemptive rights are:

Sara decided to incorporate her business under the name Gomo,Inc.Before Gomo was incorporated,Sara signed a contract in the name of Gomo,Inc.to lease a store front.Sara did not tell the other party that Gomo was not yet formed.Sara is personally liable on the lease.

Hank owns 100 shares of cumulative preferred stock in Wayside Transport,Inc.Kelsey owns 50 non-cumulative preferred shares,and Oleg owns 120 shares of common stock.Wayside does not pay dividends in 2007.In 2009:

Common stock is last stock in line for any corporate payouts,including dividends and liquidation payments.

Incorporation protects:

A corporation must have a registered agent within the state of incorporation only if the corporation maintains an office in that state.

MegaCorp purchased 10,000 shares of its own stock that had previously been owned by private investors.The stock MegaCorp repurchased is called:

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?

Under most state statutes,a corporation may:

Identify four circumstances that might persuade a court to pierce the corporate veil.

Discuss how a corporation is terminated.

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

A business corporation can be incorporated under either state law or federal law.

Which of the following statements is correct?

What are some of the advantages for a business to incorporate in Delaware?

A corporate charter is filed with:

Defining a corporation with such information as the corporate name,the number and type of authorized shares of stock,identification of the purpose and the agent,is done through the:

MegaCorp is incorporated under Delaware law.It is registered to do business in New York.Legally,in New York MegaCorp is known as what kind of corporation?

Introduction To Law

Business Ethics And Social Responsibility

Dispute Resolution

Common Law,Statutory Law,And Administrative Law

Constitutional Law

Intentional Torts And Business Torts

Negligence And Strict Liability

Crime

International Law

Introduction To Contracts

Agreement

Consideration

Legality

Capacity And Consent

Written Contracts

Third Parties

Performance And Discharge

Remedies

Practical Contracts

Introduction To Sales

Ownership And Risk

Warranties And Product Liability

Performance And Remedies

Secured Transactions

Creating A Negotiable Instrument

Liability For Negotiable Instruments

Accountants' Liability

Agency Law

Employment Law

Labor Law

Starting A Business

Partnerships

Corporate Management

Shareholders

Securities Regulation

Bankruptcy

Antitrust

Consumer Law

Environmental Law

Cyberlaw

Intellectual Property

Real Property And Tenant-landlord Law

Personal Property And Bailment

Planning For The Future: Wills,Trusts,And Insurance

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