Question 1

An S corporation must pay federal income tax at the corporate level.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following has a fixed maturity date?

Accepted Answer

A) bonds 
B) stocks 
C) cumulative preferred stock 
D) participating preferred stock 
A) bonds 
B) stocks 
C) cumulative preferred stock 
D) participating preferred stock A

Question 3

What is an indenture agreement?

Accepted Answer

The terms of a debt security are commonly contained in a contract between the corporation and the holder; this contract is known as an indenture agreement.The indenture generally contains the maturity date of the debt security,the required interest payment,the collateral,rights to conversion into common or preferred stock,call provisions,any restrictions on the corporation's right to incur other indebtedness,the rights of holders upon default,and such.It also establishes the rights and duties of the indenture trustee.Generally,a trustee is appointed to represent the interest of the debt security holders.Bank trust departments often serve in this capacity.

Question 4

Shareholders cannot seek an injunction against an ultra vires act by a corporation.

Accepted Answer

A) True 
 B)False

Question 5

A corporation is a(n)________ corporation in the state in which it is incorporated.

Accepted Answer

A) offshore 
B) domestic 
C) alien 
D) foreign 
A) offshore 
B) domestic 
C) alien 
D) foreign

Question 6

Which of the following is the special court that hears and decides business cases in Delaware?

Accepted Answer

A) court of chancery 
B) Delaware supreme court 
C) superior court of Delaware 
D) court of common pleas 
A) court of chancery 
B) Delaware supreme court 
C) superior court of Delaware 
D) court of common pleas

Question 7

In case a corporation's assets are liquidated,the preferred stockholders are paid before common stockholders.

Accepted Answer

A) True 
 B)False

Question 8

Guarantees that establish a debtor-creditor relationship in which the corporation borrows money from the investor to whom a debt security is issued are known as ________.

Accepted Answer

A) authorized shares 
B) preferred stocks 
C) common stocks 
D) fixed income securities 
A) authorized shares 
B) preferred stocks 
C) common stocks 
D) fixed income securities

Question 9

Secured bondholders can foreclose on collateral in the event of nonpayment of interest.

Accepted Answer

A) True 
 B)False

Question 10

Corporation codes regulate the formation,operation,and dissolution of corporations.

Accepted Answer

A) True 
 B)False

Question 11

Authorized shares that have been sold by the corporation are called issued shares.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following can end the existence of a corporation?

Accepted Answer

A) voluntary termination by shareholder 
B) death of a shareholder 
C) bankruptcy of a shareholder 
D) voluntary termination by the corporation's creditors 
A) voluntary termination by shareholder 
B) death of a shareholder 
C) bankruptcy of a shareholder 
D) voluntary termination by the corporation's creditors

Question 13

The debt security of notes does not have a maturity period.

Accepted Answer

A) True 
 B)False

Question 14

A(n)________ is a clause that can be included in the articles of incorporation that stipulates the activities that the corporation can engage in.The corporation can engage in no other purposes or activities.

Accepted Answer

A) ultra vires clause 
B) dissolution clause 
C) general purpose clause 
D) limited purpose clause 
A) ultra vires clause 
B) dissolution clause 
C) general purpose clause 
D) limited purpose clause

Question 15

________ are corporations that have many shareholders and whose securities are often traded on national stock exchanges.

Accepted Answer

A) Closely held corporations 
B) Non-profit corporations 
C) Publicly held corporations 
D) Shore-up corporations 
A) Closely held corporations 
B) Non-profit corporations 
C) Publicly held corporations 
D) Shore-up corporations

Question 16

A person or corporation that is empowered to accept service of process on behalf of a corporation is referred to as a(n)________.

Accepted Answer

A) promoter 
B) authorized shareholder 
C) registered agent 
D) incorporator 
A) promoter 
B) authorized shareholder 
C) registered agent 
D) incorporator

Question 17

Incorporators cannot become shareholders of the corporation they are associated with.

Accepted Answer

A) True 
 B)False

Question 18

Issued shares that have been repurchased by the corporation are referred to as ________.

Accepted Answer

A) outstanding shares 
B) liquidated shares 
C) unissued shares 
D) treasury shares 
A) outstanding shares 
B) liquidated shares 
C) unissued shares 
D) treasury shares

Question 19

Amendments to the articles of incorporation must be filed with the secretary of state of the state of incorporation.

Accepted Answer

A) True 
 B)False

Question 20

Stocks for which any missed dividend payments must be paid in the future to the preferred shareholders before the common shareholders can receive any dividends are known as ________.

Accepted Answer

A) cumulative preferred stocks 
B) noncumulative preferred stocks 
C) common stocks 
D) participating preferred stocks 
A) cumulative preferred stocks 
B) noncumulative preferred stocks 
C) common stocks 
D) participating preferred stocks

Exam 36: Corporate Formation and Financing

An S corporation must pay federal income tax at the corporate level.

Which of the following has a fixed maturity date?

What is an indenture agreement?

Shareholders cannot seek an injunction against an ultra vires act by a corporation.

A corporation is a(n)________ corporation in the state in which it is incorporated.

Which of the following is the special court that hears and decides business cases in Delaware?

In case a corporation's assets are liquidated,the preferred stockholders are paid before common stockholders.

Guarantees that establish a debtor-creditor relationship in which the corporation borrows money from the investor to whom a debt security is issued are known as ________.

Secured bondholders can foreclose on collateral in the event of nonpayment of interest.

Corporation codes regulate the formation,operation,and dissolution of corporations.

Authorized shares that have been sold by the corporation are called issued shares.

Which of the following can end the existence of a corporation?

The debt security of notes does not have a maturity period.

A(n)________ is a clause that can be included in the articles of incorporation that stipulates the activities that the corporation can engage in.The corporation can engage in no other purposes or activities.

________ are corporations that have many shareholders and whose securities are often traded on national stock exchanges.

A person or corporation that is empowered to accept service of process on behalf of a corporation is referred to as a(n)________.

Incorporators cannot become shareholders of the corporation they are associated with.

Issued shares that have been repurchased by the corporation are referred to as ________.

Amendments to the articles of incorporation must be filed with the secretary of state of the state of incorporation.

Stocks for which any missed dividend payments must be paid in the future to the preferred shareholders before the common shareholders can receive any dividends are known as ________.

Legal Environment of Business and Online Commerce

Courts and Jurisdiction

Judicial, alternative, and Online Dispute Resolution

Constitutional Law for Business and E-Commerce

Intentional Torts and Negligence

Product and Strict Liability

Intellectual Property and Cyber Piracy

Criminal Law and Cyber Crime

Nature of Traditional and E-Contracts

Agreement

Consideration and Promissory Estoppel

Capacity and Legality

Genuineness of Assent and Undue Influence

Statute of Frauds and Equitable Exceptions

Third-Party Rights and Discharge

Remedies for Breach of Traditional and E-Contracts

Digital Law and E-Commerce

Formation of Sales and Lease Contracts

Title to Goods and Risk of Loss

Remedies for Breach of Sales and Lease Contracts

Warranties

Creation of Negotiable Instruments

Holder in Due Course and Transferability

Liability, defenses, and Discharge

Banking System and Electronic Financial Transactions

Credit, mortgages, and Debtors Rights

Secured Transactions

Bankruptcy and Reorganization

Agency Formation and Termination

Liability of Principals, agents, and Independent Contractors

Employment, worker Protection, and Immigration Law

Labor Law

Equal Opportunity in Employment

Small Business, entrepreneurship, and General Partnerships

Limited Partnerships and Special Partnerships

Corporate Governance and the Sarbanes-Oxley Act

Corporate Acquisitions and Multinational Corporations

Limited Liability Companies and Limited Liability Partnerships

Franchises and Special Forms of Businesses

Investor Protection, e-Securities, and Wall Street Reform

Ethics and Social Responsibility of Business

Administrative Law and Regulatory Agencies

Consumer Protection and Product Safety

Environmental Protection

Antitrust Law and Unfair Trade Practices

Personal Property, real Property, and Insurance

Real Property

Landlord-Tenant Law and Land Use Regulation

Insurance

Accountants Duties and Liability

Wills, trusts, and Estates

Family Law

International and World Trade Law

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