Question 1

Bret and Courtney form Delite Day Care, Inc. Ultimate responsibility for pol?icy decisions necessary to the management of corporate affairs rests with Delite's

Accepted Answer

A)  board of directors. 
B)  incorporators. 
C)  officers. 
D)  shareholders.

Question 2

Under some circumstances, a corporation can refuse a shareholder's re?quest to inspect corporate records.

Accepted Answer

A) True 
 B)False

Question 3

Cumulative voting refers to the accumulation of proposals presented annually for a shareholders' vote.

Accepted Answer

A) True 
 B)False

Question 4

The ownership right to stock exists independently of the stock certificate.

Accepted Answer

A) True 
 B)False

Question 5

Only certain funds are legally available for paying dividends.

Accepted Answer

A) True 
 B)False

Question 6

Frawsty Corporation distributes beverages in the greater Northwest. Frawsty's board of directors can delegate some of its functions to

Accepted Answer

A)  Frawsty's incorporators. 
B)  Frawsty's officers. 
C)  Frawsty's shareholders. 
D)  no one.

Question 7

Fiona owns one share of stock in GR8 Boards Corporation, as evidenced by a stock certificate. Fiona loses the certificate. Her ownership of the stock is

Accepted Answer

A)  forfeited immediately. 
B)  forfeited within ten days of a third party's claim to ownership. 
C)  forfeited within thirty days if she cannot find the certificate. 
D)  not affected.

Question 8

Sol is chairman of the board of Tasty Foods Corporation. Uma, a con?sumer, falls sick after eating a Tasty product. Uma sues Tasty, and Sol individu?ally. Tasty may pay Sal's legal fees

Accepted Answer

A)  only if Sol wins the suit. 
B)  only if Tasty wins the suit. 
C)  only if Uma wins the suit. 
D)  regardless of the outcome.

Question 9

Guy is Hot Java Company's majority shareholder. Guy decides to sell his Hot Java stock. The sale will be an effective transfer of the control of the company. Does Guy owe a duty to Hot Java or its minority shareholders in this situation?

Accepted Answer

The answer of Guy is Hot Java Company's majority shareholder....

Question 10

No state permits a corporate board to have fewer than three directors.

Accepted Answer

A) True 
 B)False

Question 11

Odell, Prince, and Quinn are shareholders of Rite Corporation. Before a shareholders' meeting, they agree in writing to vote their shares together in a certain manner. Usually, such agreements are held to be

Accepted Answer

A)  invalid and unenforceable. 
B)  oppressive and irresponsible. 
C)  suspect and voidable. 
D)  valid and enforceable.

Question 12

Corporate directors and officers are insurers of business success.

Accepted Answer

A) True 
 B)False

Question 13

A director can be removed from a corporate board for cause.

Accepted Answer

A) True 
 B)False

Question 14

VeriVisual Company makes 3-D film and video equipment. VeriVisual is like most cor?porations in that its officers are hired by the firm's

Accepted Answer

A)  board of directors. 
B)  incorporators. 
C)  other officers. 
D)  shareholders.

Question 15

Fact Pattern 39-1A 
Ray is a shareholder of Small Biz Company . When the direc?tors fail to undertake an action to redress a wrong suffered by SBC, Ray files a suit on the firm's behalf.
-Refer to Fact Pattern 39-1A. Any damages recovered by Ray's suit will go to

Accepted Answer

A)  Ray. 
B)  SBC. 
C)  SBC's directors. 
D)  the state in which SBC is incorporated.

Question 16

Incorporators can appoint a corporation's first board of directors.

Accepted Answer

A) True 
 B)False

Question 17

Eddie is a shareholder of Fast Food, Inc. As a shareholder, he must approve

Accepted Answer

A)  amending the articles of incorporation. 
B)  declaring a corporate dividend. 
C)  hiring a chief executive officer. 
D)  issuing additional shares.

Question 18

Rhea is a director of Spex Corporation. As a Spex director, Rhea is

Accepted Answer

A)  a trustee because Rhea occupies a position of trust over Spex. 
B)  a trustee who holds title to Spex's property for the benefit of others. 
C)  not a trustee because Rhea does not hold title to Spex's property. 
D)  not a trustee because Rhea is not in a position of trust over Spex.

Question 19

A director is elected by a majority vote of the other members of the board.

Accepted Answer

A) True 
 B)False

Question 20

Kelly transfers shares of stock that she owns in Little Company to Max. A shareholders' meeting takes place before Max's ownership is entered in Little's stock book. A vote at the meeting can be cast by

Accepted Answer

A)  Kelly and Max. 
B)  Kelly only. 
C)  Max only. 
D)  neither Kelly nor Max.

Exam 39: Corporationsdirectors, Officers, Shareholders

Bret and Courtney form Delite Day Care, Inc. Ultimate responsibility for pol?icy decisions necessary to the management of corporate affairs rests with Delite's

Under some circumstances, a corporation can refuse a shareholder's re?quest to inspect corporate records.

Cumulative voting refers to the accumulation of proposals presented annually for a shareholders' vote.

The ownership right to stock exists independently of the stock certificate.

Only certain funds are legally available for paying dividends.

Frawsty Corporation distributes beverages in the greater Northwest. Frawsty's board of directors can delegate some of its functions to

Fiona owns one share of stock in GR8 Boards Corporation, as evidenced by a stock certificate. Fiona loses the certificate. Her ownership of the stock is

Sol is chairman of the board of Tasty Foods Corporation. Uma, a con?sumer, falls sick after eating a Tasty product. Uma sues Tasty, and Sol individu?ally. Tasty may pay Sal's legal fees

Guy is Hot Java Company's majority shareholder. Guy decides to sell his Hot Java stock. The sale will be an effective transfer of the control of the company. Does Guy owe a duty to Hot Java or its minority shareholders in this situation?

No state permits a corporate board to have fewer than three directors.

Odell, Prince, and Quinn are shareholders of Rite Corporation. Before a shareholders' meeting, they agree in writing to vote their shares together in a certain manner. Usually, such agreements are held to be

Corporate directors and officers are insurers of business success.

A director can be removed from a corporate board for cause.

VeriVisual Company makes 3-D film and video equipment. VeriVisual is like most cor?porations in that its officers are hired by the firm's

Fact Pattern 39-1A Ray is a shareholder of Small Biz Company . When the direc?tors fail to undertake an action to redress a wrong suffered by SBC, Ray files a suit on the firm's behalf. -Refer to Fact Pattern 39-1A. Any damages recovered by Ray's suit will go to

Incorporators can appoint a corporation's first board of directors.

Eddie is a shareholder of Fast Food, Inc. As a shareholder, he must approve

Rhea is a director of Spex Corporation. As a Spex director, Rhea is

A director is elected by a majority vote of the other members of the board.

Kelly transfers shares of stock that she owns in Little Company to Max. A shareholders' meeting takes place before Max's ownership is entered in Little's stock book. A vote at the meeting can be cast by