Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Which of the following would generally be considered an express power of a corporation?

Accepted Answer

A)  opening a bank account 
B)  issuing notes and bonds 
C)  purchasing advertisement 
D)  purchasing insurance 
A)  opening a bank account 
B)  issuing notes and bonds 
C)  purchasing advertisement 
D)  purchasing insurance

Question 3

A corporation can be incorporated in several states.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following criteria must be met for a company to be an S corporation?

Accepted Answer

A)  Shareholders must be other corporations or partnerships. 
B)  Nonresident aliens cannot be shareholders. 
C)  The corporation must have more than 100 shareholders. 
D)  The corporation must have more than one class of stock. 
A)  Shareholders must be other corporations or partnerships. 
B)  Nonresident aliens cannot be shareholders. 
C)  The corporation must have more than 100 shareholders. 
D)  The corporation must have more than one class of stock.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

A ________ is a long-term unsecured debt instrument that is based on a corporation's general credit standing.

Accepted Answer

A)  debenture 
B)  bond 
C)  note 
D)  treasury share 
A)  debenture 
B)  bond 
C)  note 
D)  treasury share

Question 7

Compare and contrast publicly held and closely held corporations.

Accepted Answer

Publicly held corporations have many sha

Question 8

Treasury shares cannot be issued by the corporation.

Accepted Answer

A) True 
 B)False

Question 9

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 10

________ 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 11

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 12

A corporation in the state in which it was formed is referred to as a(n) ________.

Accepted Answer

A)  foreign corporation 
B)  domestic corporation 
C)  alien corporation 
D)  overseas corporation 
A)  foreign corporation 
B)  domestic corporation 
C)  alien corporation 
D)  overseas corporation

Question 13

Stock that permits a corporation to buy back the preferred stock at some future date is known as ________.

Accepted Answer

A)  cumulative preferred stock 
B)  participating preferred stock 
C)  convertible preferred stock 
D)  redeemable preferred stock 
A)  cumulative preferred stock 
B)  participating preferred stock 
C)  convertible preferred stock 
D)  redeemable preferred stock

Question 14

Which of the following is true of the Delaware General Corporation Law?

Accepted Answer

A)  It makes it easier for other companies to take over a Delaware corporation. 
B)  The legislature seldom amends the corporation code to meet the demands of big businesses. 
C)  The statute is particularly written to be of benefit to individual businesses and consumers. 
D)  It is the most advanced corporation law in the country. 
A)  It makes it easier for other companies to take over a Delaware corporation. 
B)  The legislature seldom amends the corporation code to meet the demands of big businesses. 
C)  The statute is particularly written to be of benefit to individual businesses and consumers. 
D)  It is the most advanced corporation law in the country.

Question 15

Authorized shares that have not been sold by the corporation are known as ________.

Accepted Answer

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

Question 16

________ is a general rule of corporate law that provides that generally shareholders are liable only to the extent of their capital contributions for the debts and obligations of their corporation and are not personally liable for the debts and obligations of the corporation.

Accepted Answer

A)  Limited-purpose clause 
B)  Limited liability of shareholders 
C)  Preferred shareholder rule 
D)  Nonparticipating shareholder rule 
A)  Limited-purpose clause 
B)  Limited liability of shareholders 
C)  Preferred shareholder rule 
D)  Nonparticipating shareholder rule

Question 17

Explain how articles of incorporations may be amended.

Accepted Answer

A corporation's articles of incorporatio

Question 18

Which of the following shares have the right to vote?

Accepted Answer

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

Question 19

A corporation in the United States that has been incorporated in another country is referred to as a(n) ________ corporation.

Accepted Answer

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

Question 20

Only outstanding shares have the right to vote.

Accepted Answer

A) True 
 B)False

Exam 36: Corporate Formation and Financing

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

Which of the following would generally be considered an express power of a corporation?

A corporation can be incorporated in several states.

Which of the following criteria must be met for a company to be an S corporation?

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

A ________ is a long-term unsecured debt instrument that is based on a corporation's general credit standing.

Compare and contrast publicly held and closely held corporations.

Treasury shares cannot be issued by the corporation.

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.

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 ________.

A corporation in the state in which it was formed is referred to as a(n) ________.

Stock that permits a corporation to buy back the preferred stock at some future date is known as ________.

Which of the following is true of the Delaware General Corporation Law?

Authorized shares that have not been sold by the corporation are known as ________.

________ is a general rule of corporate law that provides that generally shareholders are liable only to the extent of their capital contributions for the debts and obligations of their corporation and are not personally liable for the debts and obligations of the corporation.

Explain how articles of incorporations may be amended.

Which of the following shares have the right to vote?

A corporation in the United States that has been incorporated in another country is referred to as a(n) ________ corporation.

Only outstanding shares have the right to vote.

Legal Heritage and the Digital Age

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Formation of Sales and Lease Contracts

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Holder in Due Course and Transferability

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