Question 1

The duty of ________ requires corporate directors and officers to use diligence when acting on behalf of the corporation.

Accepted Answer

A)  care 
B)  loyalty 
C)  good faith 
D)  obedience 
E)  a fiduciary 
A)  care 
B)  loyalty 
C)  good faith 
D)  obedience 
E)  a fiduciary

Question 2

Shareholders can bind the corporation to contracts.

Accepted Answer

A) True 
 B)False

Question 3

Assuming there is no agreement on the issue,in order to transfer shares owned by a shareholder,the shareholder must obtain approval of:

Accepted Answer

A)  the board of directors, regardless of whether the transfer is made by sale or gift. 
B)  the board of directors if the transfer is by sale, but if the transfer is to be made by gift, no approval is required. 
C)  the other shareholders, regardless of whether the transfer is made by sale or gift. 
D)  the other shareholders, but only if the shareholder is selling more than fifty percent of his or her outstanding shares. 
E)  neither the board of directors, nor the other shareholders. 
A)  the board of directors, regardless of whether the transfer is made by sale or gift. 
B)  the board of directors if the transfer is by sale, but if the transfer is to be made by gift, no approval is required. 
C)  the other shareholders, regardless of whether the transfer is made by sale or gift. 
D)  the other shareholders, but only if the shareholder is selling more than fifty percent of his or her outstanding shares. 
E)  neither the board of directors, nor the other shareholders.

Question 4

Betty is a director of the Yazula Corporation.Yazula wants to buy a tract of land on which to build a new factory.Betty owns such a tract of land,and sells it to Yazula without disclosing to Yazula that she owns the land.Betty is paid the fair market value of the land.How is Betty's action best described?

Accepted Answer

A)  Betty has violated the duty prohibiting self-dealing. 
B)  Betty has violated the duty prohibiting usurping a corporate opportunity. 
C)  Betty has violated the duty prohibiting competition with the corporation. 
D)  Betty has violated the duty prohibiting insider trading. 
E)  Betty has not violated any duty. 
A)  Betty has violated the duty prohibiting self-dealing. 
B)  Betty has violated the duty prohibiting usurping a corporate opportunity. 
C)  Betty has violated the duty prohibiting competition with the corporation. 
D)  Betty has violated the duty prohibiting insider trading. 
E)  Betty has not violated any duty.

Question 5

How broad should the "business judgment" rule be in protecting officers and directors from liability for their actions? What is the purpose of the rule? What are the difficulties in its application?

Accepted Answer

The "business judgment" rule protects co

Question 6

The directors and officers of a corporation must act within the authority conferred upon them by the state's corporation code,the articles of incorporation,the corporate bylaws,and the resolutions adopted by the board of directors.This duty is called the duty of care.

Accepted Answer

A) True 
 B)False

Question 7

If the required notice of a shareholders' meeting is not given or is defective,any action taken at the meeting is voidable.

Accepted Answer

A) True 
 B)False

Question 8

Any act that can be taken at a shareholders' meeting can be taken without a meeting if all the corporate shareholders sign a written consent approving the action.

Accepted Answer

A) True 
 B)False

Question 9

Notice of a shareholder's meeting must be given not less than ten days or more than fifty days before the date of the meeting,and may be given in person or by mail.

Accepted Answer

A) True 
 B)False

Question 10

The cumulative method of voting means that each shareholder is entitled to multiply the number of shares he or she owns by the number of directors to be elected and cast the product for a single candidate or distribute the product among two (2)or more candidates.

Accepted Answer

A) True 
 B)False

Question 11

A corporate chief executive officer can be imprisoned for up to twenty years,should he or she knowingly file and certify a false annual or quarterly report.

Accepted Answer

A) True 
 B)False

Question 12

The Sarbanes-Oxley Act makes it a crime for any person to knowingly alter,destroy,mutilate,conceal,or create any document to impair,impede,influence,or obstruct any federal investigation.

Accepted Answer

A) True 
 B)False

Question 13

The supramajority voting requirement is often required to approve mergers,consolidation,or the sale of substantially all the assets of a corporation.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not an essential element in proving that a director or officer has usurped a corporate opportunity?

Accepted Answer

A)  The opportunity was presented to the director or officer in his or her corporate capacity. 
B)  The opportunity is related to or connected with the corporation's current or proposed business. 
C)  The corporation has the financial ability to take advantage of the opportunity. 
D)  The corporate officer or director took the corporate opportunity for himself or herself. 
E)  The opportunity will, in all reasonable likelihood, be a profitable endeavor, and the corporate officer or director is aware of the favorable probability. 
A)  The opportunity was presented to the director or officer in his or her corporate capacity. 
B)  The opportunity is related to or connected with the corporation's current or proposed business. 
C)  The corporation has the financial ability to take advantage of the opportunity. 
D)  The corporate officer or director took the corporate opportunity for himself or herself. 
E)  The opportunity will, in all reasonable likelihood, be a profitable endeavor, and the corporate officer or director is aware of the favorable probability.

Question 15

Which of the following is true regarding the payment of dividends?

Accepted Answer

A)  Dividends are paid at the discretion of the board of directors. 
B)  Dividends are paid upon majority vote of the shareholders. 
C)  Dividends are paid if authorized by the board of directors and also approved by the shareholders. 
D)  Dividends are paid at the discretion of the corporate president. 
E)  Dividends are paid at the discretion of the corporation's chief financial officer. 
A)  Dividends are paid at the discretion of the board of directors. 
B)  Dividends are paid upon majority vote of the shareholders. 
C)  Dividends are paid if authorized by the board of directors and also approved by the shareholders. 
D)  Dividends are paid at the discretion of the corporate president. 
E)  Dividends are paid at the discretion of the corporation's chief financial officer.

Question 16

The Sarbanes-Oxley Act was enacted in response to:

Accepted Answer

A)  fraud by government contractors. 
B)  Medicare fraud by health care providers. 
C)  fraud by federal government employees. 
D)  fraud by state government employees. 
E)  fraudulent accounting practices. 
A)  fraud by government contractors. 
B)  Medicare fraud by health care providers. 
C)  fraud by federal government employees. 
D)  fraud by state government employees. 
E)  fraudulent accounting practices.

Question 17

Which of the following is true regarding the board of directors of a corporation?

Accepted Answer

A)  Corporate directors have an absolute right to inspect corporate books and records, facilities and premises, as well as any other information affecting the operation of the corporation. 
B)  Corporate directors have an absolute right to inspect corporate books and records, but not corporate facilities and premises. 
C)  Corporate directors do not have an absolute right to inspect corporate books and records, or corporate facilities and premises. 
D)  Corporate directors have an absolute right of inspection to access the corporation's books and records, facilities and premises, as well as other information, but only if the shareholder's vote by majority vote to allow such access. 
E)  The articles of incorporation may limit the right of the board of directors to inspect corporate books and records, and facilities and premises, as well as other information. 
A)  Corporate directors have an absolute right to inspect corporate books and records, facilities and premises, as well as any other information affecting the operation of the corporation. 
B)  Corporate directors have an absolute right to inspect corporate books and records, but not corporate facilities and premises. 
C)  Corporate directors do not have an absolute right to inspect corporate books and records, or corporate facilities and premises. 
D)  Corporate directors have an absolute right of inspection to access the corporation's books and records, facilities and premises, as well as other information, but only if the shareholder's vote by majority vote to allow such access. 
E)  The articles of incorporation may limit the right of the board of directors to inspect corporate books and records, and facilities and premises, as well as other information.

Question 18

Notice of a shareholders' meeting must be given not less than five (5)days or more than thirty (30)days before the date of the meeting.

Accepted Answer

A) True 
 B)False

Question 19

Notice of a shareholders' meeting may be given in person.

Accepted Answer

A) True 
 B)False

Question 20

Several recent college graduates perfect a new beer that uses large amounts of garlic in the brewing process.They form a corporation called Garlicbrew,Incorporated to produce and market this beer.Nance buys one hundred shares of the ten thousand shares in Garlicbrew's initial public offering.Nance wants access to corporate records in order to learn more about the company so she can be a more informed shareholder.She also wants to learn as much about Garlicbrew as she can,because she is considering starting a company to develop and market a beer that uses onions in the brewing process.The corporate officers refuse to let Nance have access to any records of the corporation.Can Nance force the officers to allow her access to the corporate records?

Accepted Answer

Nance has an absolute right to inspect s

Exam 28: Corporate Governance and Sarbanes-Oxley Act

The duty of ________ requires corporate directors and officers to use diligence when acting on behalf of the corporation.

Shareholders can bind the corporation to contracts.

Assuming there is no agreement on the issue,in order to transfer shares owned by a shareholder,the shareholder must obtain approval of:

How broad should the "business judgment" rule be in protecting officers and directors from liability for their actions? What is the purpose of the rule? What are the difficulties in its application?

The directors and officers of a corporation must act within the authority conferred upon them by the state's corporation code,the articles of incorporation,the corporate bylaws,and the resolutions adopted by the board of directors.This duty is called the duty of care.

If the required notice of a shareholders' meeting is not given or is defective,any action taken at the meeting is voidable.

Any act that can be taken at a shareholders' meeting can be taken without a meeting if all the corporate shareholders sign a written consent approving the action.

Notice of a shareholder's meeting must be given not less than ten days or more than fifty days before the date of the meeting,and may be given in person or by mail.

The cumulative method of voting means that each shareholder is entitled to multiply the number of shares he or she owns by the number of directors to be elected and cast the product for a single candidate or distribute the product among two (2)or more candidates.

A corporate chief executive officer can be imprisoned for up to twenty years,should he or she knowingly file and certify a false annual or quarterly report.

The Sarbanes-Oxley Act makes it a crime for any person to knowingly alter,destroy,mutilate,conceal,or create any document to impair,impede,influence,or obstruct any federal investigation.

The supramajority voting requirement is often required to approve mergers,consolidation,or the sale of substantially all the assets of a corporation.

Which of the following is not an essential element in proving that a director or officer has usurped a corporate opportunity?

Which of the following is true regarding the payment of dividends?

The Sarbanes-Oxley Act was enacted in response to:

Which of the following is true regarding the board of directors of a corporation?

Notice of a shareholders' meeting must be given not less than five (5)days or more than thirty (30)days before the date of the meeting.

Notice of a shareholders' meeting may be given in person.

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