blaw ch 40 practice

Beth and Curt form Day-to-Day Care, Inc. Ultimate responsibility for policy decisions necessary to the management of corporate affairs rests with Day-to-Day's a. board of directors. b. incorporators. c. officers. d. shareholders.

a

Sheila is a shareholder of Travels & Trips Inc. She has the right to inspect corporate books and records a. only if she is also a director. b. without restrictions. c. for a proper purpose. d. under no circumstances.

c

To prevent its competitors from obtaining sufficient supplies to make their products, Continental Steel, Inc., uses its market power to increase the prices of those supplies. This is a. price discrimination b. predatory pricing c. predatory bidding d. business judgement

c

Carlo is a director of Desserts Italiano, Inc. Carlo opposes a tender offer that is in the company's best interest because its acceptance would cost his position as a director. Carlo is most likely liable for a breach of a. none of the choices. b. the business judgment rule. c. the duty of care. d. the duty of loyalty.

d

Adam is a shareholder of Bay Boats Inc. with preemptive rights. With these rights, he can a. buy a prorated share of a new issue of stock before other buyers b. choose to have the firm act exclusively in a certain area. c. preempt managerial decisions that affect shareholders. d. sell a prorated share of a new issue of stock before other sellers.

a

As a corporation, Paper Products Company can pay dividends if a. their payment allows the firm to remain solvent. b. their payment causes the firm to become insolvent. c. they are paid from an unauthorized account. d. they are paid when the firm is insolvent.

a

Ben is a shareholder of Commerce & Trade Inc. As a shareholder, Ben does not have a. a right to compensation. b. dividend rights. c. inspection rights. d. preemptive rights.

a

Corporate business matters are presented at a shareholders' meeting of Hollywood Lights Inc., and other corporations, in the form of a. resolutions. b. proxies. c. articles of incorporation. d. bylaws.

a

Daryl, Elsa, and Ferris are the directors of Go Apps, Inc. Go also has four officers and fourteen shareholders. Dividends can be ordered by the firm's a. board. b. minority shareholders. c. officers. d. majority shareholders.

a

Ernie is a director of Five-Star Properties, Inc. Ernie is a property appraiser. Five-Star makes several purchases in which it pays too much. Ernie approves all the transactions without evaluating them. He is most likely liable for breach of a. the duty of care. b. none of the choices. c. the duty of loyalty. d. the business judgment rule.

a

Faye and Grant are shareholders of Hearthside Hotels, Inc. As shareholders, they must approve a. a merger. b. a decision to pursue new business opportunities. c. none of the choices. d. a contract between management and labor.

a

Holly is a director of International Foods, Inc. As a director, with respect to the corporation, Holly is a. a fiduciary. b. an incorporator. c. an officer. d. an employee.

a

Nina is a director of Outback Outfitters, Inc. Under the standard of due care owed by directors of a corporation, Nina's decisions must be informed and a. reasonable. b. unquestionable. c. indefensible. d. perfect.

a

Pat owns one share of stock in Quik-Stop Stores, Inc., as evidenced by a stock certificate. Because stock is intangible personal property, Pat's ownership of the stock a. exists independently of the stock certificate. b. cannot exist without a tangible stock certificate. c. cannot exist without the original stock certificate. d. cannot be transferred without the stock certificate.

a

Power Products Corporation permits its directors to be elected by cumulative voting. This a. allows minority shareholders to be represented on the board. b. assures directors that they will be selected by their peers. c. guarantees Thor's executive officers of the final choice. d. insures against persons who may "cloud" the corporate direction.

a

Ron is a director of Start-Up Inc. He is also a chief corporate officer in the firm and receives compensation for both positions. He is a. an inside director. b. an outside director. c. a well-rounded participant. d. in violation of the law.

a

To acquire monopoly power in its market, Global Condiments, Inc., sets its prices substantially below the normal costs of production. Under antitrust law, this is a. a violation if it thereby acquires monopoly power b. a violation if its competitors set similar prices c. a per se violation d. not a violations

a

Ann is a corporate officer for Blooming Flora, Inc. As a corporate officer, Ann is a. the head of the board of directors. b. an employee of the firm. c. the employer of the firm. d. in charge of approving the shareholders.

b

Bea transfers shares of stock that she owns in Coin Laundry Corporation to Dick. A shareholders' meeting takes place before his ownership is entered in the firm's stock book. A vote at the meeting can be cast by a. Bea and Dick. b. Bea. c. Dick. d. none of the choices.

b

Fact Pattern 40-1Don is a shareholder of Energy Renew, Inc. When the directors fail to undertake an action to redress a wrong suffered by the corporation, Don files a suit on the firm's behalf Refer to Fact Pattern 40-1. Don's suit is a shareholder's a. reimbursement suit .b. derivative suit. c. business-judgment rule suit. d. preemptive suit.

b

Fact Pattern 40-1Don is a shareholder of Energy Renew, Inc. When the directors fail to undertake an action to redress a wrong suffered by the corporation, Don files a suit on the firm's behalf. Refer to Fact Pattern 40-1. Any damages recovered by the suit will normally go to a. Energy Renew's shareholders, excluding Don. b. Energy Renew. c. Energy Renew's directors. d. Energy Renew's shareholders, including Don.

b

Mike is a shareholder of Natural Gas, Inc. Natural Gas uses cumulative voting to elect directors. This means that the number of Mike's votes is determined by the number of a. years that he has been a shareholder. b. members of the board to be elected multiplied by the total number of voting shares that he holds. c. shareholders present at the shareholders' meeting. d. shareholders' meetings that he has attended.

b

Neil, a majority shareholder of Oil Changes Inc., effectively excludes Polly, a minority shareholder, from the benefits of stock ownership in the firm. Polly can a. assert the business judgment rule. b. bring a suit for damages. c. exercise de facto control. d. force a cumulative vote.

b

Security Insurance, Inc. has a board of five directors. Security's bylaws do not state any quorum requirements. In most states, a quorum for Security's board meetings would be a. one director. b. three directors. c. four directors. d. all of the directors.

b

The board of Management Consultants, Inc., can delegate some of its responsibilities to a. the firm's incorporators. b. the firm's officers. c. the firm's shareholders. d. no one.

b

A suit is filed against AgriSeeds Corporation, alleging that the firm committed the offense of monopolization. To determine whether AgriSeeds has monopoly power requires looking at a. the marketing practices of the company's competitors b. the company's size alone c. the relevant geographic market and relevant product market d. production methods and marketing techniques

c

Brad is a shareholder of Cloud Servers Inc. He will be deemed to have a fiduciary duty to Cloud and its minority shareholders if he has a sufficient number of shares to a. assert the business judgment rule. b. bring a shareholder's derivative suit. c. exercise de facto control. d. participate in a cumulative vote.

c

Elise is a director for Fro-Yo Inc. Elise is also a director for Gelato Ice, Inc. When Fro-Yo's board considers a contract with Gelato, Elise must a. resign from Fro-Yo or Gelato. b. resign from Fro-Yo and Gelato. c. make a full disclosure of any conflict of interest. d. use her business judgment to rule on the deal.

c

Lew is a director of Mines, Inc. Using information that is not available to the public, he makes a profit trading in Mines securities. Lew is most likely liable for breach of a. none of the choices. b. the business judgment rule. c. the duty of loyalty. d. the duty of care.

c

Rosa and Sean are shareholders of Tasty Tacos, Inc. Rosa's written authorization to Sean to vote Rosa's shares at a shareholders' meeting is a. a violation of the duty of care. b. a preemptive right. c. a proxy. d. a quorum.

c

Roy, a director of Service & Sales Corporation, does not attend a board meeting for three years. During that time, Terry, the firm's president, makes improper loans that cost the company $10 million. Roy is most likely liable for breach of a. the business judgment rule. b. the duty of care. c. the duty of loyalty. d. none of the choices.

c

Charlie, Dora, and Ethel are the first directors on the board of Face Time Corporation, a social media host. Subsequent directors are elected by a majority vote of Face Time's a. users. b. employees. c. officers. d. shareholders.

d

Dane is a director of Eco Packing Company. Dane's rights, as a director, do not include a right to a. reimbursement. b. inspection. c. participation. d. self-dealing.

d

Eve is a director of Fab Style Corporation. Without informing Fab, Eve goes into business with Gro Trend, Inc., in competition with Fab. Eve is most likely liable for breach of a. none of the choices. b. the business judgment rule. c. the duty of care. d. the duty of loyalty.

d

Gina is a director on the board of Home Furnishings Inc. As a director, she may not a. authorize major corporate policy decisions. b. decide to issue stock and bonds, and declare dividends. c. select and remove corporate officers. d. subordinate the firm's welfare to her personal interests.

d

Riley is elected as a director to the board of Salty Snacks, Inc. He will most likely serve for a term of one a. decade. b. four-year period. c. lifetime. d. year.

d

Robyn owns one share of stock in SportBoards Corporation, as evidenced by a stock certificate. She loses the certificate. Her ownership of the stock is 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.

d

Rugged Bikes, Inc., makes and distributes Rugged-brand bicycles and accessories to authorized dealers, including Super Sports Stores, Inc. Super Sports operates dealerships in several locations. To insulate other dealers from direct competition, Rugged Bikes imposes limits on where Super Sports can sell Rugged products. This is a. a resale price maintenance agreement b. a price-fixing agreement c. a unilateral refusal to deal d. a territorial restriction

d

Shauna is an officer for Tropical Shirts Corporation. Due to a bad choice of shirt-maker on Shauna's part, the company's costs increase. Shauna is most likely liable for breach of a. the business judgment rule. b. the duty of care. c. the duty of loyalty. d. none of the choices.

d

Speedee Snoboards, Inc., refuses to sell its products to Timber Mountain WinterSports Stores, Inc., a retail snowboard dealership. This is a. an exclusive-dealing contract b. a territorial restriction c. attempted monopolization d. a unilateral refusal to deal

d