Question 1

Securities of publicly held corporations do not need to be registered before they can be resold.

Accepted Answer

A) True 
 B)False

Question 2

Paddle & Portage Corporation is poised to issue securities that, under the Securities Act of 1933, are "exempt." This means that the securities can be sold

Accepted Answer

A)  on the basis of a material omission or misrepresentation. 
B)  on the basis of nonpublic information . 
C)  within any six-month period by certain insiders. 
D)  without being registered. 
A)  on the basis of a material omission or misrepresentation. 
B)  on the basis of nonpublic information . 
C)  within any six-month period by certain insiders. 
D)  without being registered.

Question 3

Rosa and Sean are shareholders of Tasty Tacos Inc. Rosa's written authorization to Sean to vote Rosa's shares at a shareholders' meeting is

Accepted Answer

A)  a corporate resolution. 
B)  cumulative voting. 
C)  a proxy. 
D)  a quorum requirement. 
A)  a corporate resolution. 
B)  cumulative voting. 
C)  a proxy. 
D)  a quorum requirement.

Question 4

Soap Products Inc. is a corporation. Soap can be held liable for the acts of its agents or employees that constitute

Accepted Answer

A)  neither crimes nor torts. 
B)  crimes only. 
C)  torts only. 
D)  crimes or torts. 
A)  neither crimes nor torts. 
B)  crimes only. 
C)  torts only. 
D)  crimes or torts.

Question 5

The primary document needed to incorporate a business is

Accepted Answer

A)  the website of the secretary of state of the state of incorporation. 
B)  the minutes of the first organizational meeting. 
C)  the articles of incorporation. 
D)  the bylaws. 
A)  the website of the secretary of state of the state of incorporation. 
B)  the minutes of the first organizational meeting. 
C)  the articles of incorporation. 
D)  the bylaws.

Question 6

A corporation may not be held liable for the criminal acts of its agents and employees.

Accepted Answer

A) True 
 B)False

Question 7

If a shareholder's derivative suit is successful, any damages recovered normally go into the corporation's treasury.

Accepted Answer

A) True 
 B)False

Question 8

The primary document needed to incorporate a business is the bylaws.

Accepted Answer

A) True 
 B)False

Question 9

Trail Bike Corporation offers a new issue of securities for sale. Under the Securities Act of 1933, Trail Bike is required to

Accepted Answer

A)  contribute to the operations of national stock exchanges. 
B)  disclose financial and other information about the proposed sale. 
C)  engage in market surveillance to deter undesirable practices. 
D)  make periodic disclosures about the corporate organization and finances. 
A)  contribute to the operations of national stock exchanges. 
B)  disclose financial and other information about the proposed sale. 
C)  engage in market surveillance to deter undesirable practices. 
D)  make periodic disclosures about the corporate organization and finances.

Question 10

The Securities and Exchange Commission does not exempt any securities from the registration requirement of the Securities Act of 1933.

Accepted Answer

A) True 
 B)False

Question 11

A majority shareholder has fiduciary duties to the corporation but not to the minority shareholders.

Accepted Answer

A) True 
 B)False

Question 12

Health Food Inc. coordinates the purchase, sale, and delivery of organic products. The stated corporate purpose is to make a profit and to have a material positive impact on society and the environment. Health Food is

Accepted Answer

A)  a nonprofit corporation. 
B)  not a corporation. 
C)  a benefit corporation. 
D)  a private corporation. 
A)  a nonprofit corporation. 
B)  not a corporation. 
C)  a benefit corporation. 
D)  a private corporation.

Question 13

The Securities Exchange Act of 1934 requires that a regulated corporation make periodic disclosures about its organization and financial situation.

Accepted Answer

A) True 
 B)False

Question 14

Thin Ice Inc., a corporation, dissolves. Thin's net corporate assets will be used first to pay

Accepted Answer

A)  federal and state taxes. 
B)  common stockholders. 
C)  preferred stockholders. 
D)  bondholders. 
A)  federal and state taxes. 
B)  common stockholders. 
C)  preferred stockholders. 
D)  bondholders.

Question 15

Federal law does not require that investors receive financial and other important information concerning the securities being offered for public sale.

Accepted Answer

A) True 
 B)False

Question 16

A corporation is a legal entity created and recognized by federal law.

Accepted Answer

A) True 
 B)False

Question 17

Mars Mission Inc. is a publicly held corporation. Under the Securities Act of 1934, Mars is required to

Accepted Answer

A)  contribute to the operations of national stock exchanges. 
B)  disclose information about its organization and financial situation. 
C)  engage in market surveillance to deter undesirable practices. 
D)  keep information about its stock sales and ownership confidential. 
A)  contribute to the operations of national stock exchanges. 
B)  disclose information about its organization and financial situation. 
C)  engage in market surveillance to deter undesirable practices. 
D)  keep information about its stock sales and ownership confidential.

Question 18

Sheila is a shareholder of Travels & Trips Inc. She has the right to inspect corporate books and records

Accepted Answer

A)  only if she is also a director. 
B)  without restrictions. 
C)  for a proper purpose. 
D)  under no circumstances. 
A)  only if she is also a director. 
B)  without restrictions. 
C)  for a proper purpose. 
D)  under no circumstances.

Question 19

Issuing securities is the only way for a new corporation to raise capital.

Accepted Answer

A) True 
 B)False

Question 20

Power Products Corporation permits its directors to be elected by cumulative voting. This

Accepted Answer

A)  allows minority shareholders to be represented on the board. 
B)  assures directors that they will be selected by their peers. 
C)  guarantees Power's executive officers of the final choice. 
D)  ensures against persons who may "cloud" the corporate direction. 
A)  allows minority shareholders to be represented on the board. 
B)  assures directors that they will be selected by their peers. 
C)  guarantees Power's executive officers of the final choice. 
D)  ensures against persons who may "cloud" the corporate direction.

Exam 29: Formation and Ownership of a Corporation

Securities of publicly held corporations do not need to be registered before they can be resold.

Paddle & Portage Corporation is poised to issue securities that, under the Securities Act of 1933, are "exempt." This means that the securities can be sold

Rosa and Sean are shareholders of Tasty Tacos Inc. Rosa's written authorization to Sean to vote Rosa's shares at a shareholders' meeting is

Soap Products Inc. is a corporation. Soap can be held liable for the acts of its agents or employees that constitute

The primary document needed to incorporate a business is

A corporation may not be held liable for the criminal acts of its agents and employees.

If a shareholder's derivative suit is successful, any damages recovered normally go into the corporation's treasury.

The primary document needed to incorporate a business is the bylaws.

Trail Bike Corporation offers a new issue of securities for sale. Under the Securities Act of 1933, Trail Bike is required to

The Securities and Exchange Commission does not exempt any securities from the registration requirement of the Securities Act of 1933.

A majority shareholder has fiduciary duties to the corporation but not to the minority shareholders.

Health Food Inc. coordinates the purchase, sale, and delivery of organic products. The stated corporate purpose is to make a profit and to have a material positive impact on society and the environment. Health Food is

The Securities Exchange Act of 1934 requires that a regulated corporation make periodic disclosures about its organization and financial situation.

Thin Ice Inc., a corporation, dissolves. Thin's net corporate assets will be used first to pay

Federal law does not require that investors receive financial and other important information concerning the securities being offered for public sale.

A corporation is a legal entity created and recognized by federal law.

Mars Mission Inc. is a publicly held corporation. Under the Securities Act of 1934, Mars is required to

Sheila is a shareholder of Travels & Trips Inc. She has the right to inspect corporate books and records

Issuing securities is the only way for a new corporation to raise capital.

Power Products Corporation permits its directors to be elected by cumulative voting. This

Introduction to the Law

Ethics in Business

The Courts and Our Legal System

Constitutional Law

Business Torts

Intellectual Property

Business Crimes

Introduction to Contracts

Offer and Acceptance

Consideration

Capacity

The Legality of Agreements

Voluntary Consent

Written Contracts

Third Party Rights

Termination and Remedies

Introduction to Sales and Lease Contracts

Title and Risk of Loss

Performance and Breach

Warranties and Product Liability

Consumer Protection

The Essentials of Negotiability

Negotiable Instruments: Transfer and Liability

Banking in the Digital Age

Agency Relationships

Employment, Immigration, and Labor Law

Employment Discrimination

Types of Business Organizations

Management of a Corporation

Combining and Dissolving a Corporation

Credit and Security

Mortgages

Bankruptcy

Insurance

Personal Property

Bailments

Real Property

Landlord and Tenant Law

Wills and Trusts

Administrative Law

Antitrust Law

International and Space Law

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