Question 1

Anti-takeover tactics include all EXCEPT

Accepted Answer

A) staggered board of directors. 
B) negative tender offers. 
C) greenmail. 
D) poison pills. 
A) staggered board of directors. 
B) negative tender offers. 
C) greenmail. 
D) poison pills.

Question 2

A speculator plans to acquire control of Kelp Corporation and then resell it at a profit.A speculator is sometimes known as a corporate raider.

Accepted Answer

A) True 
 B)False

Question 3

Major Corporation wants to acquire control of Forte Company.What are some legal steps Forte can take to resist a hostile takeover?

Accepted Answer

Target companies have a variety of optio

Question 4

Alex is a director of ABC,Inc.Alex wants to personally make a major purchase from Bravo Co.If it knew of the opportunity,ABC might be also interested in making that same purchase.Alex must

Accepted Answer

A) advise the boards of both corporations of his conflict of interest. 
B) first offer the opportunity to make the purchase to the disinterested directors of ABC or its shareholders. 
C) resign from the board of directors. 
D) abandon the idea of making the purchase himself. 
A) advise the boards of both corporations of his conflict of interest. 
B) first offer the opportunity to make the purchase to the disinterested directors of ABC or its shareholders. 
C) resign from the board of directors. 
D) abandon the idea of making the purchase himself.

Question 5

A finding by a court that a manager's decision had a rational business purpose does not necessarily protect the manager from a finding that he breached a duty of care.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following takeover defenses is evidenced by the target buying back the shark's stock at a premium price?

Accepted Answer

A) poison pill 
B) blank check 
C) Supermajority voting 
D) greenmail 
A) poison pill 
B) blank check 
C) Supermajority voting 
D) greenmail

Question 7

Management's duty to have a rational business purpose,avoid illegal behavior,and make informed decisions refers to its

Accepted Answer

A) duty of care. 
B) duty of loyalty. 
C) duty of openness. 
D) duty of fairness. 
A) duty of care. 
B) duty of loyalty. 
C) duty of openness. 
D) duty of fairness.

Question 8

List and discuss the three ways to acquire control of a corporation.

Accepted Answer

Generally the three methods of acquiring

Question 9

Jenny is an officer of a corporation.She made a difficult business decision.When challenged about her decision,the court ruled she had acted in good faith and that the business judgment rule applied.As such

Accepted Answer

A) Jenny will not be held personally liable for any harm her decision has caused the company. 
B) Jenny's decision will be reviewed by a court. 
C) Jenny is immune from a lawsuit. 
D) Jenny must resign from the board. 
A) Jenny will not be held personally liable for any harm her decision has caused the company. 
B) Jenny's decision will be reviewed by a court. 
C) Jenny is immune from a lawsuit. 
D) Jenny must resign from the board.

Question 10

Amy is on the board of directors of Computers Plus.Computers Plus is looking for a warehouse to purchase.Amy owns a warehouse.In order for Amy to sell her warehouse to Computers Plus

Accepted Answer

A) the transaction must be fair to both Amy and Computers Plus. 
B) the disinterested members of the board of directors must approve the transaction. 
C) she must resign her position on the board of directors of Computers Plus before any negotiations for the warehouse begin. 
D) a court must review the opportunity to determine its favorability. 
A) the transaction must be fair to both Amy and Computers Plus. 
B) the disinterested members of the board of directors must approve the transaction. 
C) she must resign her position on the board of directors of Computers Plus before any negotiations for the warehouse begin. 
D) a court must review the opportunity to determine its favorability.

Question 11

Which of the following is a fundamental goal of shareholders?

Accepted Answer

A) To have the business survive 
B) To keep their jobs 
C) To have an immediate increase in stock price 
D) To have the business provide jobs 
A) To have the business survive 
B) To keep their jobs 
C) To have an immediate increase in stock price 
D) To have the business provide jobs

Question 12

Which of the following is NOTtrue in applying the Williams Act?

Accepted Answer

A) An individual or group acquiring more than 5 percent of a company's publicly traded stock must file a public disclosure document with the SEC. 
B) A bidder must keep a tender offer open for at least 30 business days initially. 
C) If any substantial change is made in the terms of the tender offer, it must be kept open for at least ten business days following the change. 
D) Any shareholder may withdraw acceptance of the tender offer at any time while the offer is still open. 
A) An individual or group acquiring more than 5 percent of a company's publicly traded stock must file a public disclosure document with the SEC. 
B) A bidder must keep a tender offer open for at least 30 business days initially. 
C) If any substantial change is made in the terms of the tender offer, it must be kept open for at least ten business days following the change. 
D) Any shareholder may withdraw acceptance of the tender offer at any time while the offer is still open.

Question 13

Which of the following is NOT a method to acquire control of a company?

Accepted Answer

A) Buy stock from the shareholders through a tender offer 
B) Buy the company's assets 
C) Make an initial public offering 
D) Merge with the company 
A) Buy stock from the shareholders through a tender offer 
B) Buy the company's assets 
C) Make an initial public offering 
D) Merge with the company

Question 14

One of the directors of Independent Pallet Mill purchases 100 acres of timberland.In order for him to sell the timber from this land to Independent,what must he do? If he does not act properly in this situation,what duty would he violate,and what would be the result?

Accepted Answer

The transaction will be valid if the dis

Question 15

In the late 1960s a shareholder of the company that owned the Chicago Cubs baseball team sued the company because the directors refused to install lights in Wrigley Field.The court decided that the directors

Accepted Answer

A) had a rational purpose for not installing lights and were not liable for doing anything improper. 
B) were not protected by the business judgment rule. 
C) had not acted with any rational purpose and were liable to its shareholders for damages caused by their actions. 
D) had the right to make decisions for the team without any concern for the desires of the shareholders. 
A) had a rational purpose for not installing lights and were not liable for doing anything improper. 
B) were not protected by the business judgment rule. 
C) had not acted with any rational purpose and were liable to its shareholders for damages caused by their actions. 
D) had the right to make decisions for the team without any concern for the desires of the shareholders.

Question 16

The business judgement rule is designed to protect

Accepted Answer

A) only the manager. 
B) only the manager's decision. 
C) both the manager and the manager's decison. 
D) a business from a conflict of interest. 
A) only the manager. 
B) only the manager's decision. 
C) both the manager and the manager's decison. 
D) a business from a conflict of interest.

Question 17

Directors have the authority to manage the corporate business.

Accepted Answer

A) True 
 B)False

Question 18

Tender offers are regulated on the federal level by the National Labor Relations Act.

Accepted Answer

A) True 
 B)False

Question 19

Courts are sympathetic to managers acting in the best interests of the corporation,even when the acts are illegal.

Accepted Answer

A) True 
 B)False

Question 20

A manager used her position in the company to develop a new business the company might have pursued on its own.This is a breach of the

Accepted Answer

A) duty of care. 
B) duty of non-competition. 
C) duty of loyalty. 
D) duty of recognition. 
A) duty of care. 
B) duty of non-competition. 
C) duty of loyalty. 
D) duty of recognition.

Exam 34: Management Duties

Anti-takeover tactics include all EXCEPT

A speculator plans to acquire control of Kelp Corporation and then resell it at a profit.A speculator is sometimes known as a corporate raider.

Major Corporation wants to acquire control of Forte Company.What are some legal steps Forte can take to resist a hostile takeover?

Alex is a director of ABC,Inc.Alex wants to personally make a major purchase from Bravo Co.If it knew of the opportunity,ABC might be also interested in making that same purchase.Alex must

A finding by a court that a manager's decision had a rational business purpose does not necessarily protect the manager from a finding that he breached a duty of care.

Which of the following takeover defenses is evidenced by the target buying back the shark's stock at a premium price?

Management's duty to have a rational business purpose,avoid illegal behavior,and make informed decisions refers to its

List and discuss the three ways to acquire control of a corporation.

Jenny is an officer of a corporation.She made a difficult business decision.When challenged about her decision,the court ruled she had acted in good faith and that the business judgment rule applied.As such

Amy is on the board of directors of Computers Plus.Computers Plus is looking for a warehouse to purchase.Amy owns a warehouse.In order for Amy to sell her warehouse to Computers Plus

Which of the following is a fundamental goal of shareholders?

Which of the following is NOTtrue in applying the Williams Act?

Which of the following is NOT a method to acquire control of a company?

One of the directors of Independent Pallet Mill purchases 100 acres of timberland.In order for him to sell the timber from this land to Independent,what must he do? If he does not act properly in this situation,what duty would he violate,and what would be the result?

In the late 1960s a shareholder of the company that owned the Chicago Cubs baseball team sued the company because the directors refused to install lights in Wrigley Field.The court decided that the directors

The business judgement rule is designed to protect

Directors have the authority to manage the corporate business.

Tender offers are regulated on the federal level by the National Labor Relations Act.

Courts are sympathetic to managers acting in the best interests of the corporation,even when the acts are illegal.

A manager used her position in the company to develop a new business the company might have pursued on its own.This is a breach of the

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