Question 1

The MBCA,RMBCA,and statutes of many states permit corporations to redeem both preferred and common stock.

Accepted Answer

A) True 
 B)False

Question 2

Debentures are the same as indentures.

Accepted Answer

A) True 
 B)False

Question 3

State laws regulating the issuance and sale of corporate shares of stock and other securities,typically with provisions prohibiting fraud in the sale of securities are called:

Accepted Answer

A)  blue-sky laws. 
B)  Securities and Exchange Commission Acts. 
C)  model investment securities acts. 
D)  stock warrant laws. 
A)  blue-sky laws. 
B)  Securities and Exchange Commission Acts. 
C)  model investment securities acts. 
D)  stock warrant laws.

Question 4

Discuss the use and types of stock options.

Accepted Answer

Stock options entitle their holders to p

Question 5

Tamara makes a $15,000 investment in a debenture issued by Sherman Company.Tamara is now a secured creditor of Sherman Company.

Accepted Answer

A) True 
 B)False

Question 6

If the issued and outstanding shares are broken up into a greater number of shares,each representing a proportionately smaller interest in the corporation,this is known as a:

Accepted Answer

A)  property dividend. 
B)  stock split. 
C)  stock dividend. 
D)  liquidating dividend. 
A)  property dividend. 
B)  stock split. 
C)  stock dividend. 
D)  liquidating dividend.

Question 7

The Revised Act does not consider a stock dividend issued by a corporation to its stockholders a distribution.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is correct with regard to "par value"?

Accepted Answer

A)  It indicates the worth of the stock at issue. 
B)  It is the minimum price at which the corporation may sell the stock at issuance. 
C)  It represents the maximum price at which the stock may be sold at issuance. 
D)  It represents the amount for which the stock must be traded. 
A)  It indicates the worth of the stock at issue. 
B)  It is the minimum price at which the corporation may sell the stock at issuance. 
C)  It represents the maximum price at which the stock may be sold at issuance. 
D)  It represents the amount for which the stock must be traded.

Question 9

The federal government allows the states to regulate corporate stock,since corporations are state-created entities.

Accepted Answer

A) True 
 B)False

Question 10

Allen owns 500 of the 5,000 shares outstanding of General Myopics.GM plans to issue 600 new shares.If Allen has preemptive rights,he may buy:

Accepted Answer

A)  all 600 shares before anyone else. 
B)  600 shares at the same price he paid for the other stock. 
C)  6 shares at a discount of 10%. 
D)  None of these. 
A)  all 600 shares before anyone else. 
B)  600 shares at the same price he paid for the other stock. 
C)  6 shares at a discount of 10%. 
D)  None of these.

Question 11

What do shares of equity securities confer on their owner in regard to interest in the corporation?

Accepted Answer

A)  Right to participate in control 
B)  Right to participate in earnings of the corporation 
C)  Right to participate in residual assets of the corporation upon dissolution 
D)  All of these. 
A)  Right to participate in control 
B)  Right to participate in earnings of the corporation 
C)  Right to participate in residual assets of the corporation upon dissolution 
D)  All of these.

Question 12

A distribution may be in the form of:

Accepted Answer

A)  declaration or payment of a dividend. 
B)  a purchase,redemption,or other acquisition of shares. 
C)  a distribution of indebtedness. 
D)  All of these. 
A)  declaration or payment of a dividend. 
B)  a purchase,redemption,or other acquisition of shares. 
C)  a distribution of indebtedness. 
D)  All of these.

Question 13

Article 8 of the UCC contains rules applicable to transfers of investment securities.

Accepted Answer

A) True 
 B)False

Question 14

Even if it has been lawfully and properly declared,a stock dividend may be revoked unless it has been actually distributed.

Accepted Answer

A) True 
 B)False

Question 15

In the majority of states,even non-voting shares may vote on fundamental changes that affect that class of shares.

Accepted Answer

A) True 
 B)False

Question 16

The Ajax Corporation issues bonds that pay a minimum of 6% interest but that can pay more if corporate earnings reach certain specified levels.In lieu of payment under this bond,a holder may exchange it for stock of the corporation.This bond would be a:

Accepted Answer

A)  callable income bond. 
B)  convertible participating bond. 
C)  convertible unsecured bond. 
D)  convertible secured bond. 
A)  callable income bond. 
B)  convertible participating bond. 
C)  convertible unsecured bond. 
D)  convertible secured bond.

Question 17

A corporate bond creates a debtor-creditor relationship between the corporation and the holder of the security.

Accepted Answer

A) True 
 B)False

Question 18

When the articles provide a ____,preferred stock has priority over common stock to the extent the articles state after a corporation is dissolved and when assets are distributed.

Accepted Answer

A)  stock right 
B)  liquidation preference 
C)  dividend preference 
D)  preemptive right 
A)  stock right 
B)  liquidation preference 
C)  dividend preference 
D)  preemptive right

Question 19

With respect to liability for improper dividends,a non-breaching director and an innocent shareholder are both protected from liability due to their good faith.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is correct with regard to common stock?

Accepted Answer

A)  The Revised Act has eliminated the terms "preferred" and "common." 
B)  Common stock does not have any special contract rights or preferences. 
C)  Common stock generally bears the greatest risk of loss in the event of the failure of the enterprise. 
D)  All of these are correct with regard to common stock. 
A)  The Revised Act has eliminated the terms "preferred" and "common." 
B)  Common stock does not have any special contract rights or preferences. 
C)  Common stock generally bears the greatest risk of loss in the event of the failure of the enterprise. 
D)  All of these are correct with regard to common stock.

Exam 34: Financial Structure

The MBCA,RMBCA,and statutes of many states permit corporations to redeem both preferred and common stock.

Debentures are the same as indentures.

State laws regulating the issuance and sale of corporate shares of stock and other securities,typically with provisions prohibiting fraud in the sale of securities are called:

Discuss the use and types of stock options.

Tamara makes a $15,000 investment in a debenture issued by Sherman Company.Tamara is now a secured creditor of Sherman Company.

If the issued and outstanding shares are broken up into a greater number of shares,each representing a proportionately smaller interest in the corporation,this is known as a:

The Revised Act does not consider a stock dividend issued by a corporation to its stockholders a distribution.

Which of the following is correct with regard to "par value"?

The federal government allows the states to regulate corporate stock,since corporations are state-created entities.

Allen owns 500 of the 5,000 shares outstanding of General Myopics.GM plans to issue 600 new shares.If Allen has preemptive rights,he may buy:

What do shares of equity securities confer on their owner in regard to interest in the corporation?

A distribution may be in the form of:

Article 8 of the UCC contains rules applicable to transfers of investment securities.

Even if it has been lawfully and properly declared,a stock dividend may be revoked unless it has been actually distributed.

In the majority of states,even non-voting shares may vote on fundamental changes that affect that class of shares.

The Ajax Corporation issues bonds that pay a minimum of 6% interest but that can pay more if corporate earnings reach certain specified levels.In lieu of payment under this bond,a holder may exchange it for stock of the corporation.This bond would be a:

A corporate bond creates a debtor-creditor relationship between the corporation and the holder of the security.

When the articles provide a ____,preferred stock has priority over common stock to the extent the articles state after a corporation is dissolved and when assets are distributed.

With respect to liability for improper dividends,a non-breaching director and an innocent shareholder are both protected from liability due to their good faith.

Which of the following is correct with regard to common stock?

Introduction to Law

Business Ethics and the Social Responsibility of Business

Civil Dispute Resolution

Constitutional Law

Administrative Law

A: Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance,breach,and Discharge

Contract Remedies

Relationship of Principal and Agent

Relationship With Third Parties

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Products Liability: Warranties and Strict Liability in Tort

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits,collections,and Funds Transfers

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature,formation,and Powers

Management Structure

Fundamental Changes

Secured Transactions and Suretyship

Bankruptcy

Protection of Intellectual Property

Antitrust

Consumer Protection Double

Employment Law

Securities Regulation

Accountants Legal Liability

Environmental Law

International Business Law

Introduction to Property,property Insurance,bailments,and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Decedents Estates

Legal Terminology: Understanding Criminal and Civil Law Systems

Contract Law Terminology

Exploring the Legal Concepts of Agency and Fiduciary Duty

Understanding Key Legal Concepts in Sales and Contracts

Understanding the Terminology of Banking and Finance: Key Concepts and Definitions

Exploring Legal Concepts and Processes in Business Partnerships

Understanding Corporate Law: A Guide to Ultra Vires Acts, Subscribers, Debt Securities, and More

Understanding Key Terms in Secured Transactions and Bankruptcy Law

Legal Topics and Terms