Question 1

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 2

If a court determines a manager's corporate decision amounted to self-dealing:

Accepted Answer

A)  the business judgment rule will not apply. 
B)  the transaction being challenged will be automatically voided. 
C)  the manager is automatically personally liable to the corporation. 
D)  All the above. 
A)  the business judgment rule will not apply. 
B)  the transaction being challenged will be automatically voided. 
C)  the manager is automatically personally liable to the corporation. 
D)  All the above.

Question 3

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 4

A manager who first offers an opportunity to disinterested directors or shareholders who turn it down has the right to take advantage of the opportunity herself.

Accepted Answer

A) True 
 B)False

Question 5

A corporate board's refusal to remove a "poison pill" was held reasonable in:

Accepted Answer

A)  Lippman v. Shaffer. 
B)  Unocal Corp. v. Mesa Petroleum Co. 
C)  Moore Corp. Ltd. v. Wallace Computer Services, Inc. 
D)  Anderson v. Bellino. 
A)  Lippman v. Shaffer. 
B)  Unocal Corp. v. Mesa Petroleum Co. 
C)  Moore Corp. Ltd. v. Wallace Computer Services, Inc. 
D)  Anderson v. Bellino.

Question 6

Anti-takeover tactics include all EXCEPT:

Accepted Answer

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

Question 7

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 a decision that results in money losses to 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 a decision that results in money losses to 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 8

A board of directors is considering whether to invest a great deal of money into research and development.Such a decision could have a long-term beneficial effect for the company's future.As an alternative,the board could forego the expenditure into research and development and buy back its own shares in order to immediately increase the company's reserves.Which of the below groups would most likely favor the option to increase the company's reserves and not invest in more research and development?

Accepted Answer

A)  Management. 
B)  Shareholders. 
C)  Stakeholders other than the shareholders. 
D)  Employees. 
A)  Management. 
B)  Shareholders. 
C)  Stakeholders other than the shareholders. 
D)  Employees.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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 11

RayCorp offers to buy out MegaCorp by paying $69 per share.LandCo,who also wants to buy MegaCorp,offers to pay $75 per share.When the bidding process is finally over,RayCorp has offered $85 per share and LandCo has offered to pay $90 per share.MegaCorp agrees to sell to RayCorp on grounds that,all things considered,the takeover by RayCorp would be better for the business.LandCo claims that MegaCorp should have sold the company to it since it was the highest bidder.Is LandCo correct?

Accepted Answer

A)  Yes. This is a breach of duty. MegaCorp must sell the company to the highest bidder; it cannot give preferential treatment to a lower bidder. 
B)  No. This is covered by the Williams Act. 
C)  No. The directors have broad discretion in deciding to whom to sell the company. 
D)  None of the above. 
A)  Yes. This is a breach of duty. MegaCorp must sell the company to the highest bidder; it cannot give preferential treatment to a lower bidder. 
B)  No. This is covered by the Williams Act. 
C)  No. The directors have broad discretion in deciding to whom to sell the company. 
D)  None of the above.

Question 12

The Model Business Corporation Act states: "All corporate powers shall be exercised by or under the authority of,and the business and affairs of the corporation managed by or under the direction of its:

Accepted Answer

A)  shareholders." 
B)  officers." 
C)  board of directors." 
D)  executive committee." 
A)  shareholders." 
B)  officers." 
C)  board of directors." 
D)  executive committee."

Question 13

Which of the following is the most appropriate term to use when describing management's duty to its shareholders?

Accepted Answer

A)  Official duty. 
B)  Legal duty. 
C)  Fiduciary duty. 
D)  Statutory duty. 
A)  Official duty. 
B)  Legal duty. 
C)  Fiduciary duty. 
D)  Statutory duty.

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 di

Question 15

For the business judgment rule to apply:

Accepted Answer

A)  there must be a conflict of interest. 
B)  the director must exercise extraordinary care. 
C)  the director must act in the best interests of the corporation. 
D)  All of the above. 
A)  there must be a conflict of interest. 
B)  the director must exercise extraordinary care. 
C)  the director must act in the best interests of the corporation. 
D)  All of the above.

Question 16

What is the definition of the business judgment rule?

Accepted Answer

The business judgment rule is a common l

Question 17

On the day a tender offer begins:

Accepted Answer

A)  greenmail must be sent to the SEC. 
B)  a bidder must file a disclosure statement with the SEC. 
C)  assets of the target corporation must be locked up until an inventory is completed. 
D)  the SEC issues a binding order to the target company to file audited financial statements to the bidder. 
A)  greenmail must be sent to the SEC. 
B)  a bidder must file a disclosure statement with the SEC. 
C)  assets of the target corporation must be locked up until an inventory is completed. 
D)  the SEC issues a binding order to the target company to file audited financial statements to the bidder.

Question 18

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 19

A director violates the corporate opportunity doctrine if he or she competes with the corporation,unless the disinterested directors approve of the director's actions.

Accepted Answer

A) True 
 B)False

Question 20

Corporate managers serve only one master,which is the best interest of the shareholders.

Accepted Answer

A) True 
 B)False

Exam 34: Corporate Management

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

If a court determines a manager's corporate decision amounted to self-dealing:

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.

A manager who first offers an opportunity to disinterested directors or shareholders who turn it down has the right to take advantage of the opportunity herself.

A corporate board's refusal to remove a "poison pill" was held reasonable in:

Anti-takeover tactics include all EXCEPT:

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:

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

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:

The Model Business Corporation Act states: "All corporate powers shall be exercised by or under the authority of,and the business and affairs of the corporation managed by or under the direction of its:

Which of the following is the most appropriate term to use when describing management's duty to its shareholders?

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?

For the business judgment rule to apply:

What is the definition of the business judgment rule?

On the day a tender offer begins:

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

A director violates the corporate opportunity doctrine if he or she competes with the corporation,unless the disinterested directors approve of the director's actions.

Corporate managers serve only one master,which is the best interest of the shareholders.

Introduction To Law

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