Question 1

A corporation is not liable for the contracts of its branch office.

Accepted Answer

A) True 
 B)False

Question 2

The pro rata rule holds that any increase in price paid for shares tendered must be offered to all shareholders,even those who have previously tendered their shares.

Accepted Answer

A) True 
 B)False

Question 3

Section 14(a)of the Securities Exchange Act of 1934 is a(n)________.

Accepted Answer

A)  investment provision 
B)  antifraud provision 
C)  share exchange provision 
D)  antitakeover statute 
A)  investment provision 
B)  antifraud provision 
C)  share exchange provision 
D)  antitakeover statute

Question 4

Tom,an investor from the Republic of Senborgia,acquires a large American company in Delaware.He closes down the company's branches in the state and moves the business elsewhere.This results in a heavy layoff of employees who are Delaware citizens.Delaware also suffers a decrease in tax revenues.Which of the following allows the president of the United States to suspend Tom's acquisition?

Accepted Answer

A)  Williams Act 
B)  Securities Exchange Act of 1934 
C)  Investment Company Act of 1940 
D)  Exon-Florio Foreign Investment Provision 
A)  Williams Act 
B)  Securities Exchange Act of 1934 
C)  Investment Company Act of 1940 
D)  Exon-Florio Foreign Investment Provision

Question 5

Which of the following is a similarity of a flip-over rights plan and a flip-in rights plans with respect to a target company?

Accepted Answer

A)  Both help an acquiring firm in a smooth, cost-efficient takeover of the target firm. 
B)  Both allow the target company's shareholders to convert their shares for a greater number of debt securities of the target company. 
C)  Both make it expensive for an acquiring firm to take over the target corporation. 
D)  Both allow the target company's shareholders to convert their shares for a greater number of shares of the acquiring company. 
A)  Both help an acquiring firm in a smooth, cost-efficient takeover of the target firm. 
B)  Both allow the target company's shareholders to convert their shares for a greater number of debt securities of the target company. 
C)  Both make it expensive for an acquiring firm to take over the target corporation. 
D)  Both allow the target company's shareholders to convert their shares for a greater number of shares of the acquiring company.

Question 6

The corporation that is proposed to be acquired in a tender offer situation is called tender offeror.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is true of proxies?

Accepted Answer

A)  They arise from tacit oral contracts between shareholders. 
B)  They are signed by a corporation and sent to its shareholders. 
C)  They authorize proxies to vote in place of the proxy holders. 
D)  They are permitted to be submitted electronically. 
A)  They arise from tacit oral contracts between shareholders. 
B)  They are signed by a corporation and sent to its shareholders. 
C)  They authorize proxies to vote in place of the proxy holders. 
D)  They are permitted to be submitted electronically.

Question 8

Section 14(a)of the Securities Exchange Act gives the SEC the authority to regulate ________.

Accepted Answer

A)  the formation of the board of directors of a corporation 
B)  mergers between two or more corporations 
C)  the issue of shares by a corporation 
D)  the solicitation of proxies by a corporation 
A)  the formation of the board of directors of a corporation 
B)  mergers between two or more corporations 
C)  the issue of shares by a corporation 
D)  the solicitation of proxies by a corporation

Question 9

Enworth Pharma conducts a comprehensive study,which suggests high success rates for a project aiming to develop a strong anti-lymphoma drug.Trusting the experts who conducted the study,Enworth invests large amounts of financial capital into the project.The project fails and Enworth,along with its shareholders,incur massive losses.Which of the following protects Enworth Pharma from litigation by its unhappy shareholders?

Accepted Answer

A)  pro rata rule 
B)  crashworthiness doctrine 
C)  Williams Act 
D)  business judgment rule 
A)  pro rata rule 
B)  crashworthiness doctrine 
C)  Williams Act 
D)  business judgment rule

Question 10

An employee stock ownership plan (ESOP)is expected to ________.

Accepted Answer

A)  vote the shares it possesses against a potential acquirer in a proxy contest 
B)  help shareholders of the target corporation convert their shares for a greater number of shares of the acquiring corporation 
C)  aid shareholders of the target corporation convert their shares for a greater number of debt securities of the target corporation 
D)  sell the crown jewels it owns to friendly parties in order to distract a potential acquirer 
A)  vote the shares it possesses against a potential acquirer in a proxy contest 
B)  help shareholders of the target corporation convert their shares for a greater number of shares of the acquiring corporation 
C)  aid shareholders of the target corporation convert their shares for a greater number of debt securities of the target corporation 
D)  sell the crown jewels it owns to friendly parties in order to distract a potential acquirer

Question 11

Which of the following is a requirement that a shareholder's resolution must satisfy in order for it to be included in the corporation's proxy materials?

Accepted Answer

A)  It must be unrelated to the corporation's business. 
B)  It should concern a policy issue. 
C)  It must involve the day-to-day operations of the corporation. 
D)  It should concern the payment of dividends. 
A)  It must be unrelated to the corporation's business. 
B)  It should concern a policy issue. 
C)  It must involve the day-to-day operations of the corporation. 
D)  It should concern the payment of dividends.

Question 12

Which of the following is a similarity between a merger and a share exchange?

Accepted Answer

A)  Both involve the splitting of a single company into multiple smaller companies. 
B)  Both require the complete absorption of one company and the sacrifice of its legal existence. 
C)  Both involve the continued legal existence of every company involved in the processes. 
D)  Both require the recommendation of the board of directors of the companies involved. 
A)  Both involve the splitting of a single company into multiple smaller companies. 
B)  Both require the complete absorption of one company and the sacrifice of its legal existence. 
C)  Both involve the continued legal existence of every company involved in the processes. 
D)  Both require the recommendation of the board of directors of the companies involved.

Question 13

The corporation that is owned by another corporation in a share exchange is known as a ________ corporation.

Accepted Answer

A)  subsidiary 
B)  parent 
C)  merged 
D)  holding 
A)  subsidiary 
B)  parent 
C)  merged 
D)  holding

Question 14

Which of the following is true of a subsidiary of a multinational corporation present in a foreign country?

Accepted Answer

A)  The subsidiary corporation is organized under the laws of the home country where the corporation is located. 
B)  There is a liability shield between the parent company and the subsidiary. 
C)  The parent company is liable for torts committed by the subsidiary. 
D)  The subsidiary corporation along with its parent corporation is considered a single legal entity. 
A)  The subsidiary corporation is organized under the laws of the home country where the corporation is located. 
B)  There is a liability shield between the parent company and the subsidiary. 
C)  The parent company is liable for torts committed by the subsidiary. 
D)  The subsidiary corporation along with its parent corporation is considered a single legal entity.

Question 15

Differentiate between insurgent and incumbent directors and discuss the benefits of a proxy contest involving them.

Accepted Answer

Incumbent directors are the current dire

Question 16

Which of the following is true of a merger?

Accepted Answer

A)  It results in the continued legal existence of every corporation involved in the process. 
B)  It occurs when one corporation is absorbed into another corporation. 
C)  It requires any transfer of title to property between corporations to be formally conducted by drafting deeds. 
D)  It arises when one corporation splits into two sister corporations independent of each other. 
A)  It results in the continued legal existence of every corporation involved in the process. 
B)  It occurs when one corporation is absorbed into another corporation. 
C)  It requires any transfer of title to property between corporations to be formally conducted by drafting deeds. 
D)  It arises when one corporation splits into two sister corporations independent of each other.

Question 17

The ________ protects the decisions of a board of directors that acts on an informed basis,in good faith,and in the honest belief that the action taken was in the best interests of the corporation and its shareholders.

Accepted Answer

A)  Williams Act 
B)  antifraud provision of the SEC 
C)  pro rata rule 
D)  business judgment rule 
A)  Williams Act 
B)  antifraud provision of the SEC 
C)  pro rata rule 
D)  business judgment rule

Question 18

Which of the following is true of an ordinary merger?

Accepted Answer

A)  The recommendation of the board of directors of each corporation is not required. 
B)  The articles of merger must be filed with the secretary of state of the surviving corporation. 
C)  The approval of the surviving corporation's shareholders is required if the total voting share increases by 20 percent. 
D)  The affirmative vote of the majority of shares of only the surviving corporation is required. 
A)  The recommendation of the board of directors of each corporation is not required. 
B)  The articles of merger must be filed with the secretary of state of the surviving corporation. 
C)  The approval of the surviving corporation's shareholders is required if the total voting share increases by 20 percent. 
D)  The affirmative vote of the majority of shares of only the surviving corporation is required.

Question 19

In what ways does the Williams Act affect tender offers and those involved in tender offers?

Accepted Answer

The Williams act specifically regulates

Question 20

Which of the following is true of a branch office of a multinational corporation?

Accepted Answer

A)  The branch office can be setup in a foreign country separate from the corporation. 
B)  The corporation and the branch office are considered to be separate legal entities by law. 
C)  The branch office and the corporation are separated by a liability shield that exists between them. 
D)  The corporation is liable for contracts of the branch office. 
A)  The branch office can be setup in a foreign country separate from the corporation. 
B)  The corporation and the branch office are considered to be separate legal entities by law. 
C)  The branch office and the corporation are separated by a liability shield that exists between them. 
D)  The corporation is liable for contracts of the branch office.

Exam 29: Corporate Acquisitions and Multinational Corporations

A corporation is not liable for the contracts of its branch office.

The pro rata rule holds that any increase in price paid for shares tendered must be offered to all shareholders,even those who have previously tendered their shares.

Section 14(a)of the Securities Exchange Act of 1934 is a(n)________.

Which of the following is a similarity of a flip-over rights plan and a flip-in rights plans with respect to a target company?

The corporation that is proposed to be acquired in a tender offer situation is called tender offeror.

Which of the following is true of proxies?

Section 14(a)of the Securities Exchange Act gives the SEC the authority to regulate ________.

An employee stock ownership plan (ESOP)is expected to ________.

Which of the following is a requirement that a shareholder's resolution must satisfy in order for it to be included in the corporation's proxy materials?

Which of the following is a similarity between a merger and a share exchange?

The corporation that is owned by another corporation in a share exchange is known as a ________ corporation.

Which of the following is true of a subsidiary of a multinational corporation present in a foreign country?

Differentiate between insurgent and incumbent directors and discuss the benefits of a proxy contest involving them.

Which of the following is true of a merger?

The ________ protects the decisions of a board of directors that acts on an informed basis,in good faith,and in the honest belief that the action taken was in the best interests of the corporation and its shareholders.

Which of the following is true of an ordinary merger?

In what ways does the Williams Act affect tender offers and those involved in tender offers?

Which of the following is true of a branch office of a multinational corporation?

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