Question 1

Jamira was hired by the board of directors to run the day-to-day business of a corporation.She is an agent of the corporation.Jarmia's role can best be described as an) ________.

Accepted Answer

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

Question 2

If a director has caused harm to the business by violating a fiduciary duty,a shareholder can file a direct suit against the director.

Accepted Answer

A) True 
 B)False

Question 3

Is Allison correct that she owes no duties to shareholders?

Accepted Answer

A)  No,she is incorrect because she owes a duty of care to shareholders although she owes no other duties.
B)  No,she is incorrect because she owes a duty of loyalty to shareholders although she owes no other duties.
C)  Yes,she is correct because it is the directors who owe duties to shareholders.
D)  She is partially correct.She owes both a duty of care and a duty of loyalty to minority shareholders,but no duties to majority shareholders because the law assumes that they have the power to protect their own interests.
E)  No,she is incorrect because she owes both a duty of care and a duty of loyalty to shareholders.F) C) and E)
G) D) and E)

Question 4

Regarding the liability of Simone,if any,for purchasing the stock at below its fair market value,which of the following is true?

Accepted Answer

A)  She is liable for double the stated corporate value of the stock in addition to any price she already paid.
B)  She is liable for the stated corporate value of the stock in addition to any price she already paid.
C)  She is liable for paying the difference between the price she paid for the shares and the stated corporate value of the shares.
D)  She is liable for paying the difference between the price she paid for the shares and the stated corporate value of the shares plus a $10,000 penalty.
E)  If the board wanted to offer it to her,they had that right,and there is no consequence to Simone.F) A) and B)
G) A) and D)

Question 5

In the Case Opener,a majority shareholder voted to award a bonus to her son,the president of the company,over the objection of minority shareholders.Which of the following was the result on appeal?

Accepted Answer

A)  That in awarding the bonus,the majority shareholder violated the duty of care she owed to the company.
B)  That the majority shareholder was guilty of no violation in awarding the bonus.
C)  That in awarding the bonus,the majority shareholder violated the duty of loyalty she owed to the company.
D)  That the majority shareholder's vote to award the bonus would be upheld only if she submitted additional proof that the bonus was deserved.
E)  That in awarding the bonus,the majority shareholder violated the business judgment rule.F) D) and E)
G) A) and E)

Question 6

Under which of the following should Michael and the board of directors defend themselves in an action brought by shareholders for harming the corporation?

Accepted Answer

A)  The rule of corporate integrity.
B)  The superior judgment rule.
C)  The research and investigation rule.
D)  The business judgment rule.
E)  There is no defense.F) A) and B)
G) A) and C)

Question 7

Which of the following may be redeemed for a certain number of shares at a specified price within a given time period?

Accepted Answer

A)  Share allowances
B)  Stock warrants
C)  Preemptive shares
D)  Allocated shares
E)  Share grantsF) A) and E)
G) All of the above

Question 8

Stock such as that issued to Simone is called which of the following?

Accepted Answer

A)  Watered stock
B)  Less-value stock
C)  No-par stock
D)  Unapproved stock
E)  Reduced stockF) A) and E)
G) A) and D)

Question 9

How is the number of corporate directors determined?

Accepted Answer

A)  According to the amount of profit projected by incorporators for the first year.
B)  According to the corporate articles or bylaws.
C)  By vote of the stockholders.
D)  In the discretion of the president of the corporation.
E)  According to the number of shares issued.F) B) and D)
G) B) and C)

Question 10

When a shareholder sues,alleging that he has suffered damages caused by the corporation,it is known as which of the following?

Accepted Answer

A)  Shareholder derivative suit
B)  Shareholder's direct suit
C)  Active allocation suit
D)  Shareholder action suit
E)  Investigative actionF) D) and E)
G) C) and D)

Question 11

Under the Revised Model Business Corporation Act,how long do proxies last if they are not withdrawn?

Accepted Answer

A)  One year
B)  Sixteen months
C)  Eleven months
D)  Two years
E)  Nine monthsF) None of the above
G) D) and E)

Question 12

A director of a corporation knowingly releases a dangerous drug with the knowledge that 10 percent of those who take the drug will die.He illegally falsifies testing data to get the drug approved.Which of the following is true of his liability?

Accepted Answer

A)  He cannot be held responsible if the board of directors approved the release of the drug.
B)  He can be held personally responsible for his crimes.
C)  He can be held personally responsible only if the company was not a C-corporation.
D)  He cannot be held responsible for his actions because the corporation released the drug.
E)  He cannot be held responsible unless he was at least the executive vice president.F) C) and E)
G) C) and D)

Question 13

In the text case Auerbach v.Bennett a shareholder brought a derivative action after an internal audit of the GTE Corporation suggested that the corporation's management had paid significant amounts in bribes and kickbacks over a period of several years.Which of the following was the result on appeal?

Accepted Answer

A)  The court ruled that the business judgment rule shielded the lawsuit insofar as foreign wrongdoing was alleged,but not for wrongdoing committed in the U.S.
B)  The court ruled that the business judgment rule exempted the directors from liability unless the shareholder could establish that the shareholders lost money on account of their actions.
C)  The court ruled that the business judgment rule exempted the directors from liability only so long as the directors could establish that the shareholders did not lose money on account of their actions.
D)  The court ruled that the business judgment rule did not apply because illegality was involved and that the corporation was,therefore,liable.
E)  The court ruled that the business judgment rule exempted the directors from liability.F) A) and B)
G) None of the above

Question 14

The three main groups of individuals within a corporation are directors,bondholders and customers.

Accepted Answer

A) True 
 B)False

Question 15

There is no minimum number of directors who must be present at a directors meeting in order for decisions to be valid.

Accepted Answer

A) True 
 B)False

Question 16

Daily management of a corporation is the direct responsibility of the shareholders.

Accepted Answer

A) True 
 B)False

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 an) ________.

Accepted Answer

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

Question 18

The text case Patrick v.Allen discussed whether the business judgment rule exempted directors of a corporation from liability for renting land to a private golf course,of which several directors were members,at a price sufficient to cover only property taxes.Which of the following was the result?

Accepted Answer

A)  That the business judgment rule applied to shield the directors from liability because the directors received no money directly from the golf course.
B)  That while the business judgment rule applies to directors,it did not apply to provide protection to the directors because they stood to benefit personally.
C)  That the directors could not benefit from the rule because the business judgment rule applies to officers,not directors.
D)  That the business judgment rule applied to shield the directors from liability because the transaction was properly recorded on the company's books and not hidden.
E)  That the business judgment rule applied to shield the directors from liability because no fraud was involved in the transaction.F) None of the above
G) All of the above

Question 19

Directors or officers who violate their duty of loyalty are self-dealing.

Accepted Answer

A) True 
 B)False

Question 20

In most states,a corporation's bylaws can negate preemptive rights.

Accepted Answer

A) True 
 B)False

Exam 39: Corporations: Directors, officers, and Shareholders

There is no minimum number of directors who must be present at a directors meeting in order for decisions to be valid.

Correct Answer
verified

In the Case Opener,a majority shareholder voted to award a bonus to her son,the president of the company,over the objection of minority shareholders.Which of the following was the result on appeal?

Correct Answer
verified

Directors or officers who violate their duty of loyalty are self-dealing.

Correct Answer
verified

Which of the following may be redeemed for a certain number of shares at a specified price within a given time period?

Correct Answer
verified

Jamira was hired by the board of directors to run the day-to-day business of a corporation.She is an agent of the corporation.Jarmia's role can best be described as an) ________.

Correct Answer
verified

A director of a corporation knowingly releases a dangerous drug with the knowledge that 10 percent of those who take the drug will die.He illegally falsifies testing data to get the drug approved.Which of the following is true of his liability?

Correct Answer
verified

If a director has caused harm to the business by violating a fiduciary duty,a shareholder can file a direct suit against the director.

Correct Answer
verified

The text case Patrick v.Allen discussed whether the business judgment rule exempted directors of a corporation from liability for renting land to a private golf course,of which several directors were members,at a price sufficient to cover only property taxes.Which of the following was the result?

Correct Answer
verified

Under which of the following should Michael and the board of directors defend themselves in an action brought by shareholders for harming the corporation?

Correct Answer
verified

Under the Revised Model Business Corporation Act,how long do proxies last if they are not withdrawn?

Correct Answer
verified

In most states,a corporation's bylaws can negate preemptive rights.

Correct Answer
verified

Regarding the liability of Simone,if any,for purchasing the stock at below its fair market value,which of the following is true?

Correct Answer
verified

The three main groups of individuals within a corporation are directors,bondholders and customers.

Correct Answer
verified

Stock such as that issued to Simone is called which of the following?

Correct Answer
verified

When a shareholder sues,alleging that he has suffered damages caused by the corporation,it is known as which of the following?

Correct Answer
verified

Daily management of a corporation is the direct responsibility of the shareholders.

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 an) ________.

Correct Answer
verified

How is the number of corporate directors determined?

Correct Answer
verified

Is Allison correct that she owes no duties to shareholders?

Correct Answer
verified

Correct Answer
verified

Exam 39: Corporations: Directors, officers, and Shareholders

There is no minimum number of directors who must be present at a directors meeting in order for decisions to be valid.

Correct AnswerverifiedShow Answer

In the Case Opener,a majority shareholder voted to award a bonus to her son,the president of the company,over the objection of minority shareholders.Which of the following was the result on appeal?

Correct AnswerverifiedShow Answer

Directors or officers who violate their duty of loyalty are self-dealing.

Correct AnswerverifiedShow Answer

Which of the following may be redeemed for a certain number of shares at a specified price within a given time period?

Correct AnswerverifiedShow Answer

Jamira was hired by the board of directors to run the day-to-day business of a corporation.She is an agent of the corporation.Jarmia's role can best be described as an) ________.

Correct AnswerverifiedShow Answer

A director of a corporation knowingly releases a dangerous drug with the knowledge that 10 percent of those who take the drug will die.He illegally falsifies testing data to get the drug approved.Which of the following is true of his liability?

Correct AnswerverifiedShow Answer

If a director has caused harm to the business by violating a fiduciary duty,a shareholder can file a direct suit against the director.

Correct AnswerverifiedShow Answer

The text case Patrick v.Allen discussed whether the business judgment rule exempted directors of a corporation from liability for renting land to a private golf course,of which several directors were members,at a price sufficient to cover only property taxes.Which of the following was the result?

Correct AnswerverifiedShow Answer

Under which of the following should Michael and the board of directors defend themselves in an action brought by shareholders for harming the corporation?

Correct AnswerverifiedShow Answer

Under the Revised Model Business Corporation Act,how long do proxies last if they are not withdrawn?

Correct AnswerverifiedShow Answer

In most states,a corporation's bylaws can negate preemptive rights.

Correct AnswerverifiedShow Answer

Regarding the liability of Simone,if any,for purchasing the stock at below its fair market value,which of the following is true?

Correct AnswerverifiedShow Answer

The three main groups of individuals within a corporation are directors,bondholders and customers.

Correct AnswerverifiedShow Answer

Stock such as that issued to Simone is called which of the following?

Correct AnswerverifiedShow Answer

When a shareholder sues,alleging that he has suffered damages caused by the corporation,it is known as which of the following?

Correct AnswerverifiedShow Answer

Daily management of a corporation is the direct responsibility of the shareholders.

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 an) ________.

Correct AnswerverifiedShow Answer

How is the number of corporate directors determined?

Correct AnswerverifiedShow Answer

Is Allison correct that she owes no duties to shareholders?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow 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

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