Question 1

[Kite Sales] Tatiana is president of a business that manufactures kites. The kites of her company, ABC Kites, are sold to large toy stores. After Tatiana learned a great deal about kites at ABC, she started to make kites at home. She started selling kites to friends. She also started to make inquiries regarding selling her kites to larger toy stores in the area, and she began making a few sales to them. Her plan was to start small and then leave ABC after she had increased sales. She did not work on her side project while she was on the clock with ABC. Some of the directors learned about her kite sales and accused her of wrongdoing. Tatiana denied any wrongdoing and pointed out that she did not work on her project while she was on the job with ABC.
-What duty, if any, did Tatiana violate?

Accepted Answer

A)   She did not commit any violation.
B)   She violated the duty of loyalty.
C)   She violated the duty of care.
D)   She violated the duty of understanding.
E)   She violated the duty of profit maximization.F) A) and C)
G) A) and D)

Question 2

How are directors typically chosen after the incorporation process?

Accepted Answer

A)   By majority vote of the shareholders.
B)   By majority vote of all officers.
C)   By a two-thirds vote of shareholders.
D)   The president appoints them in his or her discretion.
E)   By a unanimous vote of the shareholders.F) A) and B)
G) None of the above

Question 3

Nellie, an individual shareholder enters into a ________ which allows her to transfer share titles to a trustee in exchange for a voting trust certificate.

Accepted Answer

A)   voting trust
B)   proxy agreement
C)   voting agreement
D)   strategy agreement
E)   trust sponsorshipF) D) and E)
G) A) and D)

Question 4

Lydia is a director of a company that develops expensive residential subdivisions. The company is considering purchasing a large section of land on which to put a development. Lydia happens to own some of the land. What duty, if any, does she have regarding disclosure? Also discuss what steps, if any, should be taken by the board when considering the matter, and why, or why not they should take those steps.

Accepted Answer

Lydia has a duty to disclose her self-in...

Question 5

Directors have the right of up to 3 votes a piece.

Accepted Answer

A) True 
 B)False

Question 6

The ________ has established that any shareholder who owns more than $1,000 worth of stock in a corporation can submit proposals to be included in proxy materials that are sent to other shareholders before an annual meeting.

Accepted Answer

A)   Corporation Commission
B)   Federal Trade Commission
C)   Securities and Exchange Commission
D)   Internal Revenue Service
E)   Federal Regulatory CommissionF) A) and E)
G) A) and C)

Question 7

If a shareholder receives watered stock, they cannot be held personally liable.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is true regarding the Revised Model Business Corporation Act?

Accepted Answer

A)   It has been adopted at least in part in over half of the states.
B)   It has been fully rejected in over half of the states in favor of the Model Business Corporation Act.
C)   It has been adopted fully by seventy-five percent of the states.
D)   It has been rejected in over half of the states in favor of the Model Corporate Act.
E)   There is no Revised Model Business Corporation Act.F) A) and E)
G) B) and C)

Question 9

While ordinary decisions made by directors require a ________ vote, more important decisions sometimes require a ________ vote.

Accepted Answer

A)   Majority; two-thirds
B)   Majority; three-fourths
C)   Two-thirds; three-fourths
D)   One-third; majority
E)   Majority; unanimousF) C) and D)
G) A) and D)

Question 10

________ shares are those that have a fixed face value noted on the stock certificate.

Accepted Answer

A)   No par-value
B)   Par-value
C)   Watered
D)   Valued
E)   No-valuedF) None of the above
G) D) and E)

Question 11

Which of the following, if any, is an authorization of a shareholder to allow someone else to vote in his or her place?

Accepted Answer

A)   Approval
B)   Acknowledgement
C)   Proxy
D)   Permissive voucher
E)   There is no such document because a shareholder may not allow someone else to vote in the shareholder's place.F) A) and B)
G) B) and E)

Question 12

Michelyn is a director in Zemp Corporation. She has been quietly taking product home and selling it on the black market. The other directors of Zemp Corporation know about Michelyn's actions but fail to take corrective action. Zellen, a shareholder finds out and comes to you asking you what to do. What do you tell Zellen?

Accepted Answer

A)   That Zellen has no recourse because the other officers must bring the suit against Michelyn.
B)   Zellen should initiate a shareholder's derivative suit.
C)   Zellen should initiate a shareholder's direct suit.
D)   Zellen should seek help from the Secretary of State.
E)   Zellen should bring a personal suit against Michelyn alleged wrong doing.F) C) and E)
G) D) and E)

Question 13

What does the business judgement rule encourage?

Accepted Answer

A)   It allows officers to self-deal if there is no real conflict with the corporation.
B)   Directors and officers from ever being held accountable for bad decisions.
C)   Individuals to seek out other corporations to partner with in the best interests of the corporation.
D)   Shareholders to be involved in the day-to-day operation of the corporation.
E)   It encourages individuals to serve as directors.F) A) and D)
G) B) and D)

Question 14

What are an officer's roles in a corporation? What are the qualifications required to be an officer?

Accepted Answer

Officers are executive managers whom the...

Question 15

If a corporation has fewer than ________ shareholders, the Revised Model Business Corporation Act allows companies to eliminate the board of directors entirely.

Accepted Answer

A)   100
B)   50
C)   30
D)   25
E)   10F) B) and D)
G) A) and B)

Question 16

Which of the following is false regarding corporate decisions that might personally benefit a particular director or officer?

Accepted Answer

A)   There must be full disclosure of the interest by a director who might personally benefit from a corporate decision.
B)   There must be full disclosure of the interest by an officer who might personally benefit from a corporate decision.
C)   The director to benefit may vote on the issue although a majority of all directors must approve the transaction.
D)   The duty to disclose an interest that might personally benefit a director is a fiduciary duty.
E)   The duty to disclose an interest that might personally benefit an officer is a fiduciary duty.F) B) and E)
G) B) and D)

Question 17

Jose has an ownership interest in TY Corporation, but he is not involved in day-to-day operations. Jose can best be described as a(n) ________?

Accepted Answer

A)   Director.
B)   Affiliated director.
C)   Outside director.
D)   Officer.
E)   Shareholder.F) B) and C)
G) A) and D)

Question 18

Which statement accurately describes how directors are chosen during incorporation?

Accepted Answer

A)   Prior to incorporation, either the incorporators appoint them or the corporate articles name them.
B)   Prior to incorporation, either the incorporators appoint them or by a majority vote of the shareholders.
C)   Prior to incorporation, directors may only be named through the incorporators appointing them.
D)   Prior to incorporation, directors may only be named by the corporate articles naming them.
E)   Prior to incorporation, directors may only be named by the president appointing them.F) A) and B)
G) B) and C)

Question 19

SMPB Corporation can issue ________ to shareholders to show proof of ownership in the corporation.

Accepted Answer

A)   ownership documents
B)   stock certificates
C)   acknowledgment documents
D)   ownership certificates
E)   owner's documentsF) None of the above
G) All of the above

Question 20

Marlin is a shareholder in a major corporation. He hears about some underhand dealings and has brought suit against the corporation. What type of suit is this known as?

Accepted Answer

A)   Shareholder class action suit
B)   Investor action suit
C)   Shareholder's direct suit
D)   Shareholder derivative suit
E)   Shareholder investment suitF) A) and B)
G) A) and E)

Exam 39: Corporations: Directors, Officers, and Shareholders

Correct Answer
verified

How are directors typically chosen after the incorporation process?

Correct Answer
verified

Which of the following is false regarding corporate decisions that might personally benefit a particular director or officer?

Correct Answer
verified

The ________ has established that any shareholder who owns more than $1,000 worth of stock in a corporation can submit proposals to be included in proxy materials that are sent to other shareholders before an annual meeting.

Correct Answer
verified

While ordinary decisions made by directors require a vote, more important decisions sometimes require a vote.

Correct Answer
verified

Which of the following, if any, is an authorization of a shareholder to allow someone else to vote in his or her place?

Correct Answer
verified

Directors have the right of up to 3 votes a piece.

Correct Answer
verified

Which statement accurately describes how directors are chosen during incorporation?

Correct Answer
verified

SMPB Corporation can issue ________ to shareholders to show proof of ownership in the corporation.

Correct Answer
verified

What does the business judgement rule encourage?

Correct Answer
verified

Nellie, an individual shareholder enters into a ________ which allows her to transfer share titles to a trustee in exchange for a voting trust certificate.

Correct Answer
verified

________ shares are those that have a fixed face value noted on the stock certificate.

Correct Answer
verified

Which of the following is true regarding the Revised Model Business Corporation Act?

Correct Answer
verified

Correct Answer
verified

Jose has an ownership interest in TY Corporation, but he is not involved in day-to-day operations. Jose can best be described as a(n) ________?

Correct Answer
verified

If a corporation has fewer than ________ shareholders, the Revised Model Business Corporation Act allows companies to eliminate the board of directors entirely.

Correct Answer
verified

Marlin is a shareholder in a major corporation. He hears about some underhand dealings and has brought suit against the corporation. What type of suit is this known as?

Correct Answer
verified

If a shareholder receives watered stock, they cannot be held personally liable.

Correct Answer
verified

Correct Answer
verified
Lydia has a duty to disclose her self-in...
View Answer

What are an officer's roles in a corporation? What are the qualifications required to be an officer?

Correct Answer
verified
Officers are executive managers whom the...
View Answer

Exam 39: Corporations: Directors, Officers, and Shareholders

Correct AnswerverifiedShow Answer

How are directors typically chosen after the incorporation process?

Correct AnswerverifiedShow Answer

Which of the following is false regarding corporate decisions that might personally benefit a particular director or officer?

Correct AnswerverifiedShow Answer

The ________ has established that any shareholder who owns more than $1,000 worth of stock in a corporation can submit proposals to be included in proxy materials that are sent to other shareholders before an annual meeting.

Correct AnswerverifiedShow Answer

While ordinary decisions made by directors require a ________ vote, more important decisions sometimes require a ________ vote.

Correct AnswerverifiedShow Answer

Which of the following, if any, is an authorization of a shareholder to allow someone else to vote in his or her place?

Correct AnswerverifiedShow Answer

Directors have the right of up to 3 votes a piece.

Correct AnswerverifiedShow Answer

Which statement accurately describes how directors are chosen during incorporation?

Correct AnswerverifiedShow Answer

SMPB Corporation can issue ________ to shareholders to show proof of ownership in the corporation.

Correct AnswerverifiedShow Answer

What does the business judgement rule encourage?

Correct AnswerverifiedShow Answer

Nellie, an individual shareholder enters into a ________ which allows her to transfer share titles to a trustee in exchange for a voting trust certificate.

Correct AnswerverifiedShow Answer

________ shares are those that have a fixed face value noted on the stock certificate.

Correct AnswerverifiedShow Answer

Which of the following is true regarding the Revised Model Business Corporation Act?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Jose has an ownership interest in TY Corporation, but he is not involved in day-to-day operations. Jose can best be described as a(n) ________?

Correct AnswerverifiedShow Answer

If a corporation has fewer than ________ shareholders, the Revised Model Business Corporation Act allows companies to eliminate the board of directors entirely.

Correct AnswerverifiedShow Answer

Marlin is a shareholder in a major corporation. He hears about some underhand dealings and has brought suit against the corporation. What type of suit is this known as?

Correct AnswerverifiedShow Answer

If a shareholder receives watered stock, they cannot be held personally liable.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedLydia has a duty to disclose her self-in...View AnswerShow Answer

What are an officer's roles in a corporation? What are the qualifications required to be an officer?

Correct AnswerverifiedOfficers are executive managers whom the...View AnswerShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified

While ordinary decisions made by directors require a vote, more important decisions sometimes require a vote.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Lydia has a duty to disclose her self-in...
View Answer

Correct Answer
verified
Officers are executive managers whom the...
View Answer