Exam 27: Corporate Formation and Financing

Mallard Corporation is incorporated in Iowa,and does business in Ohio.This corporation is:

The "liquidation preference" of preferred stock means that preferred shareholders have the right to be paid before common shareholders in the event of a corporation's dissolution and liquidation.

A corporation is a legal person for most purposes.

Which of the following is true regarding the history of corporations?

Corporate shares are freely transferable by a shareholder by sale,assignment,pledge,or gift unless they are issued pursuant to certain exemptions from securities regulation.

The concept of "centralized management" means that the management of a corporation is separate and independent from its shareholders; therefore,a corporation is not subject to any oversight by its shareholders.

Local government corporations are often called municipal corporations.

The bylaws can be adopted by either the incorporators or the initial board of directors.

Owners of corporations are called stakeholders.

A corporation's express powers represent only those powers granted to it in its articles of incorporation.

The members of the board of directors are appointed by upper-level corporate management.

A ________ is a short-term debt security with a maturity of five (5)years or less.

Debt securities are also called variable income securities.

Every corporation must have a registered office and registered agent,and both must be identified in the articles of incorporation.

An "ultra vires" act will generally cause dissolution of the corporation.

Together,the directors and the officers form the corporate management.

Shareholders of professional corporations are often called limited partners.

A dissolved corporation continues its corporate existence,but may not carry on any business after its dissolution.

Which of the following is true about the par value of common stock?

Betty is considering forming a business in Colorado.She is thinking about a business that would rent inline skates to customers and transport them to the top of Mount Evans.The road up Mount Evans is the highest paved road in the United States,and at its culmination,peaks at just over 14,000 feet above sea level.Customers could skate from the top of the mountain,at 14,000 feet,to a point in a nearby town,at 8,000 feet above sea level.The customers would skate about thirty-five miles,with nearly the entire distance downhill.Betty is considering whether she should form a corporation to operate this business.What are the advantages and disadvantages of forming a corporation? Is there any way she could avoid any of the disadvantages?