Question 1

The Revised Act explicitly requires a corporations's charter to authorize:

Accepted Answer

A) one or more classes of shares that have limited voting rights. 
B) one or more classes of shares that together are entitled to receive the net assets of the corporation upon dissolution. 
C) Both (a) and (b). 
D) nothing. The Revised Act only recommends, not requires, the charter contents. 
A) one or more classes of shares that have limited voting rights. 
B) one or more classes of shares that together are entitled to receive the net assets of the corporation upon dissolution. 
C) Both (a) and (b). 
D) nothing. The Revised Act only recommends, not requires, the charter contents.

Question 2

Clayton Tile has a secured bond on specific property of Ceramic Creations,Inc.Clayton's claim against Ceramic is enforceable only against that specific property.

Accepted Answer

A) True 
 B)False

Question 3

Under the Revised Act,Brafford,a director who is a member of the board that declares an illegal dividend,may be but is not under all circumstances personally liable to the company for the amount that is illegal even if she personally voted for the distribution contrary to the company's charter.

Accepted Answer

A) True 
 B)False

Question 4

A stock split results in a larger proportion of corporate ownership by the shareholder.

Accepted Answer

A) True 
 B)False

Question 5

State laws that regulate the issuance and sale of securities are known as:

Accepted Answer

A) the Uniform Commercial Code. 
B) the MBCA. 
C) Blue Sky Laws. 
D) None of the above. 
A) the Uniform Commercial Code. 
B) the MBCA. 
C) Blue Sky Laws. 
D) None of the above.

Question 6

A bondholder generally takes less of a financial risk than a shareholder of a corporation.

Accepted Answer

A) True 
 B)False

Question 7

Even if it has been lawfully and properly declared,a stock dividend may be revoked unless it has been actually distributed.

Accepted Answer

A) True 
 B)False

Question 8

If 100 shares of $50 par value stock were issued at $75 per share,how much would constitute capital surplus?

Accepted Answer

A) $750 
B) $7,500 
C) $2,500 
D) A corporation cannot issue stock for higher than the par value. 
A) $750 
B) $7,500 
C) $2,500 
D) A corporation cannot issue stock for higher than the par value.

Question 9

Warrick makes a $10,000 investment in a debenture issued by Wryteway Company.Warrick is now an unsecured creditor of Wryteway Company.

Accepted Answer

A) True 
 B)False

Question 10

Caverun Co.has two classes of stock.The company may:

Accepted Answer

A) issue stock warrants, which are short-term options to buy shares. 
B) issue stock rights, which are long-term options to buy shares. 
C) not use stock options to make one class of stock more attractive than the other. 
D) use stock options and warrants, the form and content of which are determined by the board of directors, to supplement compensation plans for directors, officers, and employees. 
E) Both (a) and (b). 
A) issue stock warrants, which are short-term options to buy shares. 
B) issue stock rights, which are long-term options to buy shares. 
C) not use stock options to make one class of stock more attractive than the other. 
D) use stock options and warrants, the form and content of which are determined by the board of directors, to supplement compensation plans for directors, officers, and employees. 
E) Both (a) and (b).

Question 11

The "cash flow test" for the payment of dividends and other distributions is also known as the:

Accepted Answer

A) equity insolvency test. 
B) balance sheet test. 
C) surplus test. 
D) net assets test. 
A) equity insolvency test. 
B) balance sheet test. 
C) surplus test. 
D) net assets test.

Question 12

Bonds subject to a redemption provision,which permits the corporation to redeem,or pay off,all or a part of the issue before maturity at a specified redemption price are known as:

Accepted Answer

A) secured bonds. 
B) income bonds. 
C) callable bonds. 
D) convertible bonds. 
A) secured bonds. 
B) income bonds. 
C) callable bonds. 
D) convertible bonds.

Question 13

Yukon Corporation purchases 1,000 shares of its own stock from Jones at a price of $50 a share.These shares,which are now issued but not outstanding,are known as:

Accepted Answer

A) treasury shares. 
B) preemptive shares. 
C) preferred stock. 
D) no par stock. 
A) treasury shares. 
B) preemptive shares. 
C) preferred stock. 
D) no par stock.

Question 14

Under the Revised Act,if the charter simply states that the corporation elects to have preemptive rights,the shareholders have no preemptive rights with respect to:

Accepted Answer

A) shares issued as compensation to directors, officers, and employees. 
B) shares issued within six months of incorporation. 
C) the corporation's unissued shares. 
D) Both (a) and (b). 
A) shares issued as compensation to directors, officers, and employees. 
B) shares issued within six months of incorporation. 
C) the corporation's unissued shares. 
D) Both (a) and (b).

Question 15

Shares without par value may be issued for any amount set by the board or the shareholders.

Accepted Answer

A) True 
 B)False

Question 16

An indenture is not a debt agreement.

Accepted Answer

A) True 
 B)False

Question 17

A shareholder of one-third of all the stock in a corporation would be entitled to one-third of all corporate assets of an ongoing company.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is correct with regard to "par value"?

Accepted Answer

A) It indicates the worth of the stock at issue. 
B) It is the minimum price at which the corporation may sell the stock at issuance. 
C) It represents the maximum price at which the stock may be sold at issuance. 
D) It represents the amount for which the stock must be traded. 
A) It indicates the worth of the stock at issue. 
B) It is the minimum price at which the corporation may sell the stock at issuance. 
C) It represents the maximum price at which the stock may be sold at issuance. 
D) It represents the amount for which the stock must be traded.

Question 19

Preferred stockholders do not have priority over corporate creditors in liquidation.

Accepted Answer

A) True 
 B)False

Question 20

When a corporation issues no par value stock,the entire consideration received constitutes stated capital except that amount allocated in a manner permitted by law to capital surplus or paid-in surplus.

Accepted Answer

A) True 
 B)False

Exam 34: Financial Structure of Corporations

The Revised Act explicitly requires a corporations's charter to authorize:

Clayton Tile has a secured bond on specific property of Ceramic Creations,Inc.Clayton's claim against Ceramic is enforceable only against that specific property.

Under the Revised Act,Brafford,a director who is a member of the board that declares an illegal dividend,may be but is not under all circumstances personally liable to the company for the amount that is illegal even if she personally voted for the distribution contrary to the company's charter.

A stock split results in a larger proportion of corporate ownership by the shareholder.

State laws that regulate the issuance and sale of securities are known as:

A bondholder generally takes less of a financial risk than a shareholder of a corporation.

Even if it has been lawfully and properly declared,a stock dividend may be revoked unless it has been actually distributed.

If 100 shares of $50 par value stock were issued at $75 per share,how much would constitute capital surplus?

Warrick makes a $10,000 investment in a debenture issued by Wryteway Company.Warrick is now an unsecured creditor of Wryteway Company.

Caverun Co.has two classes of stock.The company may:

The "cash flow test" for the payment of dividends and other distributions is also known as the:

Bonds subject to a redemption provision,which permits the corporation to redeem,or pay off,all or a part of the issue before maturity at a specified redemption price are known as:

Yukon Corporation purchases 1,000 shares of its own stock from Jones at a price of $50 a share.These shares,which are now issued but not outstanding,are known as:

Under the Revised Act,if the charter simply states that the corporation elects to have preemptive rights,the shareholders have no preemptive rights with respect to:

Shares without par value may be issued for any amount set by the board or the shareholders.

An indenture is not a debt agreement.

A shareholder of one-third of all the stock in a corporation would be entitled to one-third of all corporate assets of an ongoing company.

Which of the following is correct with regard to "par value"?

Preferred stockholders do not have priority over corporate creditors in liquidation.

When a corporation issues no par value stock,the entire consideration received constitutes stated capital except that amount allocated in a manner permitted by law to capital surplus or paid-in surplus.

Introduction to Law

Business Ethics

Civil Dispute Resolution

Constitutional Law

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Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance, Breach, and Discharge

Contract Remedies

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability: Warranties and Strict Liability

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Form and Content

Transfer and Holder in Due Course

Liability of Parties

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Relationship of Principal and Agent

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Formation and Internal Relations of General Partnerships

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Nature and Formation of Corporations

Management Structure of Corporations

Fundamental Changes of Corporations

Secured Transactions and Suretyship

Bankruptcy

Securities Regulation

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Interests in Real Property

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