Examples questions chapter 18 from book

ommon shareholders have the right to vote on: a. proposals for fundamental changes affecting the company such as mergers or liquidation. b. compensation for the officers. c. when to pay dividends. d. price of stock.

a. proposals for fundamental changes affecting the company such as mergers or liquidation.

A corporation that is formed in one state but does business in another state is referred to in the second state as: a. a domestic corporation. b. an alien corporation. c. a distant corporation. d. a foreign corporation.

d. a foreign corporation.

Which of the following provisions are typically in a charter/Article of Incorporation for a corporation? Choose 2 answers. a. the trade secrets of the corporation b. the intended business purpose of the corporation c. the name and address of the corporation's agent d. the advertising plan for the corporation

b. the intended business purpose of the corporation and c. the name and address of the corporation's agent

Where should Articles of Incorporation be filed? a. With the federal government b. Articles of Incorporation are not filed. c. With the county recorder's office d. With the state

d. With the state

Which of the following is a requirement for the initial formation of a corporation? a. a minute book b. an initial stock offering c. a board of directors d. Articles of Incorporation

d. Articles of Incorporation

Which of the following defines the "implied powers" of a corporation? a. The power granted to a corporation by the corporate bylaws b. The power granted to a corporation by the U.S. Constitution c. Any power arising out of a formally adopted resolution of the corporation d. The right to perform all acts reasonably necessary to accomplish a corporate purpose

d. The right to perform all acts reasonably necessary to accomplish a corporate purpose

At the first meeting of corporate shareholders, what business is normally conducted (choose 2 answers)? a. The adoption of corporate bylaws b. Voting on the business name c. The election of the board of directors d. The filing of the articles of incorporation

a. The adoption of corporate bylaws and c. The election of the board of directors

Which of the following is a duty of both corporate directors and corporate officers? a. making a full disclosure of potential conflicts of interest b. working at least forty hours per week for the corporation c. purchasing stock in the company d. limiting political endorsements to only candidates that the corporation supports

a. making a full disclosure of potential conflicts of interest

What documents spell out the powers of a corporation? Choose 2 answers. a. the bylaws b. de facto documentation c. certificate of corporate power d. the charter (also called the articles of incorporation)

a. the bylaws and d. the charter (also called the articles of incorporation)

In ordinary circumstances, when the corporate veil has not been pierced, a shareholder may be liable for: a. unpaid amounts on the shares held by that shareholder. b. the actions of the board of directors. c. a portion of the settlement in a class-action lawsuit. d. a portion of corporate fines for environmental violations.

a. unpaid amounts on the shares held by that shareholder.

A foreign corporation is: a. one that was incorporated outside of the United States. b. one that was incorporated in two or more different states. c. one that it privately held. d. one that was incorporated in a different state.

d. one that was incorporated in a different state.

If an action is permitted expressly by the corporate bylaws, but is prohibited by state law, a corporation: a. must challenge the state law. b. does not have the power to act. c. must amend their articles of incorporation. d. has the power to act.

b. does not have the power to act.

Officers and directors owe which of the following duties to the corporation? Choose 2 answer choices. a. Duty of Good Decisions b. Duty of Care c. Duty of Compensation d. Duty of Loyalty

b. Duty of Care and d. Duty of Loyalty

In which of the following would the business judgment rule not help a manager escape liability? Choose 2 answer choices. a. When they did not act in the best interests of the corporation b. If they conducted a reasonable inquiry, but the activity still resulted in a poor outcome c. When they acted as an ordinarily prudent person in good faith would act d. When they committed an illegal act

a. When they did not act in the best interests of the corporation and d. When they committed an illegal act

To meet the standard for the duty of care, a person must: a. act in good faith and with the judgment of an ordinarily prudent person. b. act in good faith and without a mistake. c. act in good faith and with the judgment of a highly skilled person. d. be faithful to the corporation.

a. act in good faith and with the judgment of an ordinarily prudent person.

Which of the following are rights of common shareholders? Choose 3 answers. a. voting on matters such as election of directors and proposals for mergers or liquidation b. priority for having debts paid from the liquidating company's assets c. transferable ownership d. opportunity to inspect corporate books and records

a. voting on matters such as election of directors and proposals for mergers or liquidation and c. transferable ownership and d. opportunity to inspect corporate books and records

Which of the following are qualities of a non-profit corporation (choose 2 answers)? a. It provides minimal dividends to company shareholders. b. Its goal is to not earn a profit. c. It does not provide dividends to shareholders. d. Its goal is to earn a profit.

c. It does not provide dividends to shareholders. d. Its goal is to earn a profit.

Which of the following is a necessary element of the business judgment rule? Choose 2 answer choices. a. The person acted with extraordinary skill and care. b. The outcome of the action did not cause financial harm to the corporation. c. The person acted in good faith. d. The person acted with the care of an ordinarily prudent person.

c. The person acted in good faith. and d. The person acted with the care of an ordinarily prudent person.

What type of corporation is formed for the purpose of doing a public service instead of making money? a. privately held b. public c. nonprofit d. publicly held

c. nonprofit

Who is liable for contracts entered into on behalf of the corporation before the corporation is formed? a. the Chief Executive Officer b. the corporation c. the promoter d. no one, because that cannot happen

c. the promoter