Question 1

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.F) B) and D)
G) A) and B)

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

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)  SecuredF) A) and B)
G) B) and D)

Question 4

The FDIC is an example of what type of corporation?

Accepted Answer

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

Question 5

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.F) C) and D)
G) D) and E)

Question 6

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.F) A) and D)
G) A) and B)

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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.F) A) and B)
G) A) and D)

Question 9

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

Accepted Answer

A)  Novators
B)  Subscribers
C)  Promoters
D)  Acceptors
E)  SubscriptionersF) None of the above
G) D) and E)

Question 10

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 legalityF) B) and E)
G) All of the above B

Question 11

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.F) B) and C)
G) A) and D)

Question 12

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.F) D) and E)
G) None of the above

Question 13

Most corporations are ________.

Accepted Answer

A)  De facto
B)  Non-prof it
C)  Public
D)  Foreign
E)  For profitF) B) and E)
G) All of the above

Question 14

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 corporationF) A) and E)
G) A) and B)

Question 15

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 corporationsF) A) and E)
G) A) and B)

Question 16

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

Accepted Answer

A)  Debt
B)  Finance
C)  Equity
D)  Formal
E)  CertifiedF) A) and B)
G) A) and C)

Question 17

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 debtF) B) and D)
G) A) and D)

Question 18

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

Accepted Answer

Following are implied powers of a corporation:

Question 19

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.F) C) and D)
G) C) and E)

Question 20

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

Accepted Answer

A)  Debt
B)  Formal
C)  Equity
D)  Certified
E)  FinanceF) A) and C)
G) A) and D) A

Exam 38: Corporations: Formation and Financing

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The FDIC is an example of what type of corporation?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Which of the following is false regarding corporations?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedB

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Most corporations are ________.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is another name for debt securities?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedFollowing are implied powers of a corporation:

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedA

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B

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Following are implied powers of a corporation:

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A