Question 1

Stocks represent the borrowing of funds by firms.

Accepted Answer

A) True 
 B)False

Question 2

As a general rule, shareholders make daily business decisions for a corporation.

Accepted Answer

A) True 
 B)False

Question 3

Nora is a director of Outback Outfitters, Inc. Under the standard of due care owed by directors of a corporation, Nora's decisions must be informed and

Accepted Answer

A)  made after reasonable investigation.
B)  unquestionable.
C)  indefensible.
D)  perfect.E) A) and B)
F) None of the above A

Question 4

Venture capital is capital provided to new business ventures by professional, outside investors.

Accepted Answer

A) True 
 B)False

Question 5

The incorporation of the town of Halfway, Oregon, is approved by the state. Halfway is

Accepted Answer

A)  a publicly traded corporation.
B)  a public corporation.
C)  a private corporation.
D)  not a corporation.E) All of the above
F) A) and C)

Question 6

A state court can dissolve a corporation for fraudulent conduct by its directors.

Accepted Answer

A) True 
 B)False

Question 7

A firm named Biometric Research Corporation makes an attempt to incorporate for a purpose other than making a profit. Biometric is

Accepted Answer

A)  a foreign corporation.
B)  an alien corporation.
C)  a nonprofit corporation.
D)  not a corporation.E) A) and D)
F) B) and C)

Question 8

If a corporation has S corporation status, it can avoid the imposition of income taxes at the corporate level.

Accepted Answer

A) True 
 B)False  True

Question 9

When the corporation is harmed by the actions of a third party, the directors can bring a lawsuit in the name of the corporation against that party.

Accepted Answer

A) True 
 B)False  True

Question 10

Guy is Hot Java Company's majority shareholder. Guy decides to sell his Hot Java stock. The sale will be an effective transfer of the control of the company. Does Guy owe a duty to Hot Java or its minority shareholders in this situation?

Accepted Answer

Yes. A single shareholder-or a few share...

Question 11

Every shareholder is entitled to examine specified corporate records but only in person, not through an agent.

Accepted Answer

A) True 
 B)False

Question 12

A director or officer must exercise due care in performing their duties, including acting in good faith.

Accepted Answer

A) True 
 B)False

Question 13

Since stock is intangible personal property, the ownership right to stock exists independently of a stock certificate.

Accepted Answer

A) True 
 B)False

Question 14

The ordinary rules of agency normally apply to the employment of corporate officers.

Accepted Answer

A) True 
 B)False

Question 15

Sports Data Stream Inc. is a start-up business. To obtain financing, the corporation makes use of a cooperative activity in which people network and pool funds and other resources via the Internet. This is

Accepted Answer

A)  the issuance and sale of securities.
B)  private equity capital.
C)  venture capital.
D)  crowdfunding.E) All of the above
F) C) and D)

Question 16

Sierra is a holder of preferred stock in Rio Grande Irrigation & Development Corporation. Sierra has priority over holders of Rio common stock as to

Accepted Answer

A)  nothing.
B)  payments of dividends.
C)  the date on which Rio must repurchase the shares.
D)  upward changes in the market price of the shares.E) B) and D)
F) B) and C)

Question 17

Brandi is a shareholder of Cloud Servers & Routers Inc.. Brandi will be deemed to have a fiduciary duty to Cloud and its minority shareholders if she has a sufficient number of shares to

Accepted Answer

A)  assert the business judgment rule.
B)  bring a shareholder's derivative suit.
C)  exercise de facto control.
D)  participate in a cumulative vote.E) B) and D)
F) A) and D)

Question 18

David wants to go into business as Explosive Bursts to make and market fireworks. When deciding which form of business organization would be most appropriate, David would normally take into account all of the following except

Accepted Answer

A)  the liability of the owners.
B)  the forms of competitors' business organizations.
C)  tax considerations.
D)  the need for capital.Fact Pattern 20-1 Ray is a shareholder of Small Biz Company (SB
C)  .When the directors fail to undertake an action to redress a wrong suffered by SBC, Ray files a suit on the firm's behalf.E) B) and C)
F) A) and C)

Question 19

Deepwater Dredging Company holds itself out to others as being a corporation but makes no attempt to incorporate. Estuary Marina signs a contract with Deepwater and Deepwater fails to perform. Estuary Marina files a suit against the firm. The court will likely hold that Deepwater is

Accepted Answer

A)  a corporation by estoppel.
B)  an alien corporation.
C)  an S corporation.
D)  a close corporation.E) B) and C)
F) A) and B)

Question 20

Smoke & Mirrors Inc. can be compelled to dissolve by

Accepted Answer

A)  any of the choices.
B)  its competitors.
C)  dissatisfied clients and customers.
D)  a court order.E) C) and D)
F) A) and B)

Exam 20: Corporations

Stocks represent the borrowing of funds by firms.

Correct AnswerverifiedShow Answer

As a general rule, shareholders make daily business decisions for a corporation.

Correct AnswerverifiedShow Answer

Nora is a director of Outback Outfitters, Inc. Under the standard of due care owed by directors of a corporation, Nora's decisions must be informed and

Correct AnswerverifiedA

Venture capital is capital provided to new business ventures by professional, outside investors.

Correct AnswerverifiedShow Answer

The incorporation of the town of Halfway, Oregon, is approved by the state. Halfway is

Correct AnswerverifiedShow Answer

A state court can dissolve a corporation for fraudulent conduct by its directors.

Correct AnswerverifiedShow Answer

A firm named Biometric Research Corporation makes an attempt to incorporate for a purpose other than making a profit. Biometric is

Correct AnswerverifiedShow Answer

If a corporation has S corporation status, it can avoid the imposition of income taxes at the corporate level.

Correct AnswerverifiedTrue

When the corporation is harmed by the actions of a third party, the directors can bring a lawsuit in the name of the corporation against that party.

Correct AnswerverifiedTrue

Guy is Hot Java Company's majority shareholder. Guy decides to sell his Hot Java stock. The sale will be an effective transfer of the control of the company. Does Guy owe a duty to Hot Java or its minority shareholders in this situation?

Correct AnswerverifiedYes. A single shareholder-or a few share...View AnswerShow Answer

Every shareholder is entitled to examine specified corporate records but only in person, not through an agent.

Correct AnswerverifiedShow Answer

A director or officer must exercise due care in performing their duties, including acting in good faith.

Correct AnswerverifiedShow Answer

Since stock is intangible personal property, the ownership right to stock exists independently of a stock certificate.

Correct AnswerverifiedShow Answer

The ordinary rules of agency normally apply to the employment of corporate officers.

Correct AnswerverifiedShow Answer

Sports Data Stream Inc. is a start-up business. To obtain financing, the corporation makes use of a cooperative activity in which people network and pool funds and other resources via the Internet. This is

Correct AnswerverifiedShow Answer

Sierra is a holder of preferred stock in Rio Grande Irrigation & Development Corporation. Sierra has priority over holders of Rio common stock as to

Correct AnswerverifiedShow Answer

Brandi is a shareholder of Cloud Servers & Routers Inc.. Brandi will be deemed to have a fiduciary duty to Cloud and its minority shareholders if she has a sufficient number of shares to

Correct AnswerverifiedShow Answer

David wants to go into business as Explosive Bursts to make and market fireworks. When deciding which form of business organization would be most appropriate, David would normally take into account all of the following except

Correct AnswerverifiedShow Answer

Deepwater Dredging Company holds itself out to others as being a corporation but makes no attempt to incorporate. Estuary Marina signs a contract with Deepwater and Deepwater fails to perform. Estuary Marina files a suit against the firm. The court will likely hold that Deepwater is

Correct AnswerverifiedShow Answer

Smoke & Mirrors Inc. can be compelled to dissolve by

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
True

Correct Answer
verified
True

Correct Answer
verified
Yes. A single shareholder-or a few share...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified