Question 1

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 2

Which of the following describes the duty of loyalty?

Accepted Answer

A) It requires managers to make decisions they reasonably believe to be in the best interest of the corporation. 
B) It prohibits managers from making a decision that benefits them at the expense of the corporation. 
C) It requires consideration of the interests of the surrounding community. 
D) It requires using care that an ordinarily prudent person would take in a similar situation. 
A) It requires managers to make decisions they reasonably believe to be in the best interest of the corporation. 
B) It prohibits managers from making a decision that benefits them at the expense of the corporation. 
C) It requires consideration of the interests of the surrounding community. 
D) It requires using care that an ordinarily prudent person would take in a similar situation.

Question 3

The "business judgment rule" has been replaced by "good faith statutes" in most states.

Accepted Answer

A) True 
 B)False

Question 4

Discuss the purposes of the business judgment rule.

Accepted Answer

The business judgment rule is designed t

Question 5

What type of transaction employs special committees made up of disinterested board members who review the transaction to determine if it is entirely fair to the corporation?

Accepted Answer

A) hostile takeover 
B) self-dealing 
C) rational business purpose 
D) corporate opportunity 
A) hostile takeover 
B) self-dealing 
C) rational business purpose 
D) corporate opportunity

Question 6

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.

Question 7

Which of the following statements is correct with respect to state efforts to offer protection to companies targeted for hostile takeovers?

Accepted Answer

A) Courts offer the only legal protection to companies targeted for hostile takeovers. 
B) Statutory law offers the only legal protection to companies. 
C) Both statutory law and the state courts have provided some degree of protection for companies. 
D) State courts and state statutes have offered no protection for companies targeted for hostile takeovers. 
A) Courts offer the only legal protection to companies targeted for hostile takeovers. 
B) Statutory law offers the only legal protection to companies. 
C) Both statutory law and the state courts have provided some degree of protection for companies. 
D) State courts and state statutes have offered no protection for companies targeted for hostile takeovers.

Question 8

Courts have long ruled that corporate directors and officers owe a fiduciary duty to

Accepted Answer

A) the corporation only. 
B) the corporation and shareholders. 
C) shareholders only. 
D) society at large. 
A) the corporation only. 
B) the corporation and shareholders. 
C) shareholders only. 
D) society at large.

Question 9

What is greenmail?

Accepted Answer

A) a takeover defense in which the target buys back the shark's stock at a premium price 
B) a takeover defense where the target sells off the assets that the takeover company most wants 
C) a takeover strategy in which one company buys stock from the shareholders of the target firm 
D) a takeover defense where the target effectively limits how large a block of stock an investor can buy 
A) a takeover defense in which the target buys back the shark's stock at a premium price 
B) a takeover defense where the target sells off the assets that the takeover company most wants 
C) a takeover strategy in which one company buys stock from the shareholders of the target firm 
D) a takeover defense where the target effectively limits how large a block of stock an investor can buy

Question 10

The business judgment rule accomplishes all of the following EXCEPT

Accepted Answer

A) permits directors to do their jobs. 
B) keeps judges out of corporate management. 
C) encourages directors to serve. 
D) totally protects managers from all liability. 
A) permits directors to do their jobs. 
B) keeps judges out of corporate management. 
C) encourages directors to serve. 
D) totally protects managers from all liability.

Question 11

If a court determines that 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) the manager will automatically be fired. 
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) the manager will automatically be fired.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Under the Williams Act,

Accepted Answer

A) the target company must state its position on a tender offer within 10 days of its commencement. 
B) a bidder must keep a tender offer open for at least 30 business days initially. 
C) no shareholder may withdraw acceptance of the tender offer while the offer is still open. 
D) All of these are correct. 
A) the target company must state its position on a tender offer within 10 days of its commencement. 
B) a bidder must keep a tender offer open for at least 30 business days initially. 
C) no shareholder may withdraw acceptance of the tender offer while the offer is still open. 
D) All of these are correct.

Question 14

What is the definition of the business judgment rule?

Accepted Answer

The business judgment rule states that m

Question 15

A manager who has engaged in self-dealing has violated the duty of loyalty to the corporation,unless the self-dealing was entirely fair to the corporation.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

Generally,the three methods of acquiring

Question 17

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 18

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 also might be 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 19

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 20

In order to use poison pills,staggered boards of directors,and supermajority voting as takeover defenses,they must first be authorized by the shareholders.

Accepted Answer

A) True 
 B)False

Exam 34: Management Duties

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.

Which of the following describes the duty of loyalty?

The "business judgment rule" has been replaced by "good faith statutes" in most states.

Discuss the purposes of the business judgment rule.

What type of transaction employs special committees made up of disinterested board members who review the transaction to determine if it is entirely fair to the corporation?

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

Which of the following statements is correct with respect to state efforts to offer protection to companies targeted for hostile takeovers?

Courts have long ruled that corporate directors and officers owe a fiduciary duty to

What is greenmail?

The business judgment rule accomplishes all of the following EXCEPT

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

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

Under the Williams Act,

What is the definition of the business judgment rule?

A manager who has engaged in self-dealing has violated the duty of loyalty to the corporation,unless the self-dealing was entirely fair to the corporation.

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

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

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 also might be interested in making that same purchase.Alex must

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

In order to use poison pills,staggered boards of directors,and supermajority voting as takeover defenses,they must first be authorized by the shareholders.

Introduction to Law

Ethics and Corporate Social Responsibility

International Law

Common Law, Statutory Law, and Administrative Law

Constitutional Law

Dispute Resolution

Crime

Intentional Torts and Business Torts

Negligence, Strict Liability, and Product Liability

Privacy and Internet Law

Introduction to Contracts

Agreement: Offers and Acceptances

Consideration

Legality

Voidable Contracts: Capacity and Consent

Written Contracts

Third Parties

Contract Termination

Remedies

Practical Contracts

Introduction to Sales

Ownership, Risk and Warranties

Performance and Remedies

Secured Transactions

Creating a Negotiable Instrument

Liability for Negotiable Instruments

Accountants Liability

Agency Law

Employment and Labor Law

Employment Discrimination

Starting a Business: Llcs and Other Options

Partnerships

Life and Death of a Corporation

Shareholder Rights

Bankruptcy

Securities Regulation

Antitrust

Consumer Protection

Environmental Law

Intellectual Property

Real Property and Landlord Tenant Law

Personal Property and Bailment

Planning for the Future: Wills, Trusts and Insurance

Filters