LEB Test 4

Which of the following statements is correct?

Bonds are long-term debt secured by company assets, Debentures are long-term unsecured debt, and Notes are short-term debt and may be secured or unsecured. ***All the above are correct.

Most business corporations are incorporated under federal, rather than state, law.

False

Rex owns 50 shares of In-Pro, Inc. stock. The type of stock he owns is entitled to dividends before other types of stock. In-Pro could not afford to pay dividends last year, so Rex lost the dividend for that year for good. If In-Pro dissolves, Rex and others owning the same type of stock have a right to receive their share of corporate assets before other shareholders. What type of In-Pro stock does Rex own?

Non-cumulative preferred stock.

Fashions, Inc. has 12 shareholders. There is no shareholder agreement concerning the board of directors. The company is subject to the Model Act. How many directors is Fashions, Inc. required to have?

One.

Who establishes executive compensation?

The board of directors.

A corporation must always have an official address within the state of incorporation. If the corporation does not maintain an office in that state, the corporation may hire a registered agent.

True

Shorry decided to incorporate his business under the name of "Zamm." In addition to Zamm, the Model Act requires that Shorry include one of the following words in the business name: "corporation," "incorporated," "limited," or "company."

True

A corporate charter is filed with:

a state's Secretary of State office.

The officers of a corporation are:

appointed by the board of directors.

The proceeds, if any, of a derivative lawsuit, go to:

the corporation.