Question 1

Which of the following takeover defenses is also known as a shareholder rights plan?

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 2

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) No.MegaCorp is acting in good faith by considering all things,not just the offering price of the shares. 
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) No.MegaCorp is acting in good faith by considering all things,not just the offering price of the shares.

Question 3

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 4

Generally,managers that make informed decisions will not be liable even if their decision turned out badly.

Accepted Answer

A) True 
 B)False

Question 5

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.

Exam 34: Management Duties

Which of the following takeover defenses is also known as a shareholder rights plan?

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

Generally,managers that make informed decisions will not be liable even if their decision turned out badly.

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

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