Question 1

Which of the following types of securities represent loans to a corporation?

Accepted Answer

A) Debt 
B) Formal 
C) Equity 
D) Certified 
E) Finance 
A) Debt 
B) Formal 
C) Equity 
D) Certified 
E) Finance A

Question 2

When a corporation is incorporated,the secretary of state usually issues a[n] ,a document certifying that the corporation is incorporated in the state and is authorized to conduct business.

Accepted Answer

A) Approval of incorporation 
B) Certificate of incorporation 
C) Certification of legality 
D) Authorization of incorporation 
E) Chronicle of legality 
A) Approval of incorporation 
B) Certificate of incorporation 
C) Certification of legality 
D) Authorization of incorporation 
E) Chronicle of legality B

Question 3

What are the two implied corporate powers,as set forth in the text?

Accepted Answer

Following are implied powers of a corporation:

Question 4

Corporations are not required to indicate in the name of the corporation that the business is incorporated.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following types of securities represent ownership in a corporation?

Accepted Answer

A) Debt 
B) Finance 
C) Equity 
D) Formal 
E) Certified 
A) Debt 
B) Finance 
C) Equity 
D) Formal 
E) Certified

Question 6

Which of the following is another name for debt securities?

Accepted Answer

A) Stocks 
B) Equity securities 
C) Certificates of deposit 
D) Bonds 
E) Preferred debt 
A) Stocks 
B) Equity securities 
C) Certificates of deposit 
D) Bonds 
E) Preferred debt

Question 7

Which of the following is false regarding corporations?

Accepted Answer

A) Courts consider corporations to be "legal persons." 
B) Corporations are legal entities. 
C) Corporations exist separately from their shareholders. 
D) Corporations cannot claim rights under the U.S.Constitution. 
E) Corporations can sue or be sued by others. 
A) Courts consider corporations to be "legal persons." 
B) Corporations are legal entities. 
C) Corporations exist separately from their shareholders. 
D) Corporations cannot claim rights under the U.S.Constitution. 
E) Corporations can sue or be sued by others.

Question 8

If Callie sues Min-ji,Marcus,and Penelope for unpaid amounts without a novation in place,what would be the most likely result?

Accepted Answer

A) Min-ji,Marcus,and Penelope will win so long as they can prove that Callie knew that the feed was purchased for a new corporation and not for their personal farm use. 
B) Callie would likely win unless it can be established that the new corporation is making a profit and is able to pay her. 
C) Callie would likely win because courts generally hold promoters liable and rule that preincorporation contracts do not bind the new corporation. 
D) Callie would likely win unless it can be established that the new corporation was capitalized with at least $100,000 and is able to pay her. 
E) Min-ji,Marcus,and Penelope will win unless they have already paid partial amounts leading Callie to expect that they,not the corporation,had accepted liability. 
A) Min-ji,Marcus,and Penelope will win so long as they can prove that Callie knew that the feed was purchased for a new corporation and not for their personal farm use. 
B) Callie would likely win unless it can be established that the new corporation is making a profit and is able to pay her. 
C) Callie would likely win because courts generally hold promoters liable and rule that preincorporation contracts do not bind the new corporation. 
D) Callie would likely win unless it can be established that the new corporation was capitalized with at least $100,000 and is able to pay her. 
E) Min-ji,Marcus,and Penelope will win unless they have already paid partial amounts leading Callie to expect that they,not the corporation,had accepted liability.

Question 9

A corporation may call in and repay at specific times which of the following types of bonds?

Accepted Answer

A) Income 
B) Convertible 
C) Unsecured 
D) Callable 
E) Secured 
A) Income 
B) Convertible 
C) Unsecured 
D) Callable 
E) Secured

Question 10

Five friends decide to form a corporation together.They wish to participate in corporate management.What must they do to participate?

Accepted Answer

A) They should specify in corporate bylaws that they will participate in corporate management. 
B) They will not be allowed to participate in corporate management as shareholders. 
C) They must form an S-corp,as C-corp shareholders are not permitted to participate in corporate management. 
D) They should form a partnership instead. 
E) Nothing,shareholders generally participate in corporate management. 
A) They should specify in corporate bylaws that they will participate in corporate management. 
B) They will not be allowed to participate in corporate management as shareholders. 
C) They must form an S-corp,as C-corp shareholders are not permitted to participate in corporate management. 
D) They should form a partnership instead. 
E) Nothing,shareholders generally participate in corporate management.

Question 11

The friends who agreed to buy stock are known by what term?

Accepted Answer

A) Novators 
B) Subscribers 
C) Promoters 
D) Acceptors 
E) Subscriptioners 
A) Novators 
B) Subscribers 
C) Promoters 
D) Acceptors 
E) Subscriptioners

Question 12

If over 50% of the shareholders die,a corporation must be dissolved.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following if true regarding powers state incorporation statutes typically grant to corporations?

Accepted Answer

A) State incorporation statutes give corporations the power to make charitable contributions. 
B) State incorporation statutes expressly state the powers granted to corporations thereby negating the existence of implied powers. 
C) State incorporation statutes give corporations existence for up to 100 years. 
D) State incorporation statutes prohibit corporations from loaning money because that is within the realm of state banks recognized by the state banking regulatory authority. 
E) State incorporation statutes generally expressly give corporations only the broad authority to operate within the law to the benefit of stockholders resulting in most actions of corporations arising from implied powers. 
A) State incorporation statutes give corporations the power to make charitable contributions. 
B) State incorporation statutes expressly state the powers granted to corporations thereby negating the existence of implied powers. 
C) State incorporation statutes give corporations existence for up to 100 years. 
D) State incorporation statutes prohibit corporations from loaning money because that is within the realm of state banks recognized by the state banking regulatory authority. 
E) State incorporation statutes generally expressly give corporations only the broad authority to operate within the law to the benefit of stockholders resulting in most actions of corporations arising from implied powers.

Question 14

Most corporations are ________.

Accepted Answer

A) De facto 
B) Non-prof it 
C) Public 
D) Foreign 
E) For profit 
A) De facto 
B) Non-prof it 
C) Public 
D) Foreign 
E) For profit

Question 15

Preetha's attempt to hold the shareholders primarily liable for her debt is likely to have what result?

Accepted Answer

A) She will likely be successful. 
B) She will likely be unsuccessful. 
C) She will be successful only if XYZ Corporation is insolvent and remains so for at least six months. 
D) She will be successful only if XYZ Corporation proceeds to file for bankruptcy protection. 
E) She will be successful only if XYZ Corporation is insolvent and remains so for at least one year. 
A) She will likely be successful. 
B) She will likely be unsuccessful. 
C) She will be successful only if XYZ Corporation is insolvent and remains so for at least six months. 
D) She will be successful only if XYZ Corporation proceeds to file for bankruptcy protection. 
E) She will be successful only if XYZ Corporation is insolvent and remains so for at least one year.

Question 16

What,if any,is Amy's best theory in order to hold Rick personally liable to her,assuming XYZ's corporate status is in place?

Accepted Answer

A) That the corporate veil should be pierced because Rick committed fraud through the corporation. 
B) Because of XYZ's corporate status and her responsibility to investigate the situation,she will not be able to hold Rick personally liable to her. 
C) That in equity Rick should be held personally liable. 
D) That Rick should be personally liable because of his status as a shareholder. 
E) That Rick should be personally liable because he acted on behalf of the corporation in soliciting the funds. 
A) That the corporate veil should be pierced because Rick committed fraud through the corporation. 
B) Because of XYZ's corporate status and her responsibility to investigate the situation,she will not be able to hold Rick personally liable to her. 
C) That in equity Rick should be held personally liable. 
D) That Rick should be personally liable because of his status as a shareholder. 
E) That Rick should be personally liable because he acted on behalf of the corporation in soliciting the funds.

Question 17

Which of the following is true regarding corporate structure in Germany?

Accepted Answer

A) Germany has three tiers of corporate power with management at the lowest tier,the board on the second tier,and the supervisory board on the top tier. 
B) Germany has three tiers of corporate power with management at the lowest tier,the supervisory board on the second tier,and the board on the top tier. 
C) Germany has three tiers of corporate power with the supervisory board at the lowest tier,management on the second tier,and the board on the top tier. 
D) Germany has three tiers of corporate power with the board at the lowest tier,the supervisory board on the second tier,and management on the top tier. 
E) Germany has three tiers of corporate power with the board at the lowest tier,management on the second tier,and the supervisory board on the top tier. 
A) Germany has three tiers of corporate power with management at the lowest tier,the board on the second tier,and the supervisory board on the top tier. 
B) Germany has three tiers of corporate power with management at the lowest tier,the supervisory board on the second tier,and the board on the top tier. 
C) Germany has three tiers of corporate power with the supervisory board at the lowest tier,management on the second tier,and the board on the top tier. 
D) Germany has three tiers of corporate power with the board at the lowest tier,the supervisory board on the second tier,and management on the top tier. 
E) Germany has three tiers of corporate power with the board at the lowest tier,management on the second tier,and the supervisory board on the top tier.

Question 18

Which of the following generally does not offer stock to the public?

Accepted Answer

A) Closely held corporations 
B) Alien corporations 
C) Minority shareholder controlled corporations 
D) Foreign corporations 
E) Carefully held corporations 
A) Closely held corporations 
B) Alien corporations 
C) Minority shareholder controlled corporations 
D) Foreign corporations 
E) Carefully held corporations

Question 19

The FDIC is an example of what type of corporation?

Accepted Answer

A) Publicly held 
B) Private 
C) Domestic 
D) Public 
E) Closely held 
A) Publicly held 
B) Private 
C) Domestic 
D) Public 
E) Closely held

Question 20

A corporation that,with minor errors,has substantially met the requirements of the state incorporation statute is known as which of the following?

Accepted Answer

A) A de jure corporation 
B) A corporation by estoppel 
C) A corporation by reservation 
D) An inactive corporation 
E) A de facto corporation 
A) A de jure corporation 
B) A corporation by estoppel 
C) A corporation by reservation 
D) An inactive corporation 
E) A de facto corporation

Exam 38: Corporations: Formation and Financing

Which of the following types of securities represent loans to a corporation?

When a corporation is incorporated,the secretary of state usually issues a[n] ,a document certifying that the corporation is incorporated in the state and is authorized to conduct business.

What are the two implied corporate powers,as set forth in the text?

Corporations are not required to indicate in the name of the corporation that the business is incorporated.

Which of the following types of securities represent ownership in a corporation?

Which of the following is another name for debt securities?

Which of the following is false regarding corporations?

If Callie sues Min-ji,Marcus,and Penelope for unpaid amounts without a novation in place,what would be the most likely result?

A corporation may call in and repay at specific times which of the following types of bonds?

Five friends decide to form a corporation together.They wish to participate in corporate management.What must they do to participate?

The friends who agreed to buy stock are known by what term?

If over 50% of the shareholders die,a corporation must be dissolved.

Which of the following if true regarding powers state incorporation statutes typically grant to corporations?

Most corporations are ________.

Preetha's attempt to hold the shareholders primarily liable for her debt is likely to have what result?

What,if any,is Amy's best theory in order to hold Rick personally liable to her,assuming XYZ's corporate status is in place?

Which of the following is true regarding corporate structure in Germany?

Which of the following generally does not offer stock to the public?

The FDIC is an example of what type of corporation?

A corporation that,with minor errors,has substantially met the requirements of the state incorporation statute is known as which of the following?

An Introduction to Dynamic Business Law

Business Ethics

The Uslegal System

Alternative Dispute Resolution

Constitutional Principles

International and Comparative Law

Crime and the Business Community

Tort Law

Negligence and Strict Liability

Product Liability

Liability of Accountants and Other Professionals

Intellectual Property

Introduction to Contracts

Agreement

Consideration

Capacity and Legality

Legal Assent

Contracts in Writing

Third-Party Rights to Contracts

Discharge and Remedies

Introduction to Sales and Lease Contracts

Title,risk of Loss,and Insurable Interest

Performance and Obligations Under Sales and Leases

Remedies for Breach of Sales and Lease Contracts

Warranties

Negotiable Instruments: Negotiability and Transferability

Negotiation, holder in Due Course, and Defenses

Liability, defenses, and Discharge

Checks and Electronic Fund Transfers

Secured Transactions

Other Creditors Remedies and Suretyship

Bankruptcy and Reorganization

Agency Formation and Duties

Liability to Third Parties and Termination

Forms of Business Organization

Partnerships: Nature, formation, and Operation

Partnerships: Termination and Limited Partnerships

Corporations: Directors, officers, and Shareholders

Corporations: Mergers, consolidations, terminations

Corporations: Securities and Investor Protection

Employment and Labor Law

Employment Discrimination

Administrative Law

Consumer Law

Environmental Law

Antitrust Law

The Nature of Property, personal Property, and Bailments

Real Property

Landlord-Tenant Law

Insurance Law

Wills and Trusts

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