Multiple Choice (Bus 250 Test 3)
What federal agency requires that the seller of a franchise give the potential buyer Franchise Disclosure Document (FDD) and audited financial statements? a. The Interstate Commerce Commission (ICC) b. The Franchise Sales Commission (FSC) c. The Securities and Exchange Commission (SEC) d. The Federal Trade Commission (FTC)
D
What is a "scorched earth strategy"? a. A takeover strategy whereby the bidder merges its company with that of the target firm. b. A takeover strategy whereby a bidder secretly buys stock from the shareholders. c. A defensive takeover strategy where the target effectively limits how large a block of stock an investor can buy. d. A defensive takeover strategy where the target sells off the assets that the takeover company most wants.
D
What is an inside director? a. A shareholder charged with the illegal act of insider trading b. A shareholder who is a board member of a competing firm c. A member of the board of directors who is also a board member of a competing firm d. A member of the board of directors who is also an employee of the corporation
D
When two parties incur the liability of a partnership without actually being partners, it is referred to as a. a wrongful association. b. partnership by apparent authority. c. a charitable partnership. d. partnership by estoppel.
D
The advantage to an S corporation is a. its offering of multiple classes of stock. b. its ability to have partnerships and corporations invest as shareholders. c. its ability to attract an unlimited number of shareholders. d. its treatment of shareholders for income taxation purposes.
D
An agency will be terminated in all but which one of the following situations? a. A travel agent files for individual bankruptcy under Chapter 13. b. The principal and agent agree on an agency relationship to sell a boat, and the boat is sold. c. An electrician, an agent of a contractor, has her license revoked. d. The agent violates his duty of loyalty.
A
Anti-takeover tactics include all EXCEPT a. negative tender offers. b. greenmail. c. poison pills. d. staggered board of directors.
A
Astrid and Razi formed a partnership in which they agree to share profits 60 percent to Astrid and 40 percent to Razi. Losses will be shared a. 60 percent to Astrid and 40 percent to Razi, unless otherwise agreed. b. according to their capital contributions to the partnership. c. in whatever proportion provides the greatest tax advantage for the partners that year. d. equally, unless otherwise agreed.
A
For the business judgment rule to apply, the manager must a. have acted in the best interests of the corporation. b. prove he or she was aware of the decision being made. c. have exercised extraordinary care in resolving the situation. d. be trying to resolve a conflict of interest.
A
In its most basic terms, a fiduciary relationship is one of a. trust. b. competition. c. disclosure. d. control.
A
James was a partner in a large firm. He died unexpectedly. His son, Frank, wanted to take over for his father in the partnership and was well qualified to do the work his father had done. Which statement best describes Frank's rights in the partnership if he inherits the interest? a. Frank is entitled to the value in the partnership, but not to become a full partner. b. Frank cannot be a full-fledged partner, but he can vote on firm matters. c. Frank has no rights to his father's partnership interest. d. Frank has a right to take over for his father in the partnership.
A
Laurie is incorporating her business. Laurie's home state is Wisconsin. Business will be conducted in California, Michigan, Pennsylvania, and Virginia. Laurie a. can incorporate the business in any state. b. must incorporate in Delaware. c. must incorporate the business in Wisconsin, California, Michigan, Pennsylvania and Virginia. d. must incorporate the business in Wisconsin, the home state.
A
Lori and Dan own a small restaurant as partners. Dan works several hours a day cooking, waiting on tables, doing the books, and so forth. Dan believes he is entitled to be paid at least a standard wage for all his work since, at the present time, the part-time kitchen helpers earn more than he does! Lori claims Dan is not entitled to anything other than one-half the net profits. Is Lori right? a. Yes, if there is no agreement between Lori and Dan allowing for either of them to be paid wages for work done at the restaurant. b. No. Dan may collect a fair wage for the work he has performed. c. No. Dan may collect only minimum wage, as required by federal law. d. Yes. The UPA states a partner may not collect a "wage" from the partnership business under any circumstances.
A
Nikki was an tax accountant with HBR Accounting. Nikki decided to do some tax consulting in the evenings and on weekends. HBR is unaware of Nikki's consulting work. Which statement is correct? a. Nikki has breached a fiduciary duty to HBR since she is competing with HBR. b. Nikki has not breached a fiduciary duty to HBR since Nikki has a contractual relationship with her clients, not her employer. c. Nikki has not breached a fiduciary duty to HBR since her behavior does not reflect badly on the accounting firm. d. Nikki has not breached a fiduciary duty to HBR since her consulting is done after her work for HBR.
A
On the day a tender offer begins, a. a bidder must file a disclosure statement with the SEC. b. greenmail must be sent to the SEC. c. the SEC issues a binding order to the target company to file audited financial statements to the bidder. d. assets of the target corporation must be locked up until an inventory is completed.
A
The Anderson v. Bellino case held that a. the defendant did not act in good faith and violated the corporate opportunity doctrine. b. the plaintiff was not able to show that the defendant violated the corporate opportunity doctrine. c. the defendant's action was not a conflict of interest and was made in good faith. d. the business judgment rule protected the plaintiff's decision to award the Keno contract to an outside firm.
A
The business form that offers the limited liability of a corporation and the tax status of a flow-through entity is a. a limited liability company. b. a close corporation. c. a general partnership. d. a sole proprietorship.
A
The directors of MegaCorp learn that an outsider is planning on buying enough voting stock to get herself elected to the board of directors. MegaCorp, which has cumulative voting, quickly puts together a vote of shareholders to eliminate the company's cumulative voting procedure. The shareholders vote to do away with cumulative voting. The outsider, Dawn, who wanted to get herself elected to MegaCorp's board, claims that the company has committed an illegal act. Is she right? a. No. Under the Model Act, regardless of MegaCorp's motives, it had the right to act as it did. b. Yes. The United States Supreme Court has ruled that a publicly held corporation that purposefully sets about to eliminate cumulative voting to prevent a person from getting herself elected to the board has acted illegally. c. No, provided the company did not change its cumulative voting provision solely for the purpose of preventing a particular person from taking advantage of that right. d. Yes, but only if the company is incorporated in a state that has adopted the Model Act.
A
The officers of a corporation are a. chosen by the board of directors. b. appointed by the Secretary of State. c. appointed by the president of the company. d. elected by shareholders.
A
Which of the following describes the duty of loyalty? a. It prohibits managers from making a decision that benefits them at the expense of the corporation. b. It requires consideration of the interests of the surrounding community. c. It requires using care that an ordinarily prudent person would take in a similar situation. d. It requires managers to make decisions they reasonably believe to be in the best interest of the corporation.
A
Which of the following is a fundamental goal of shareholders? a. To have an immediate increase in stock price b. To have the business survive c. To keep their jobs d. To have the business provide jobs
A
Which of the following statements is correct with respect to state efforts to offer protection to companies targeted for hostile takeovers? a. Both statutory law and the state courts have provided some degree of protection for companies. b. Statutory law offers the only legal protection to companies. c. Courts offer the only legal protection to companies targeted for hostile takeovers. d. State courts and state statutes have offered no protection for companies targeted for hostile takeovers.
A
A corporation must obtain shareholder approval before the company a. opens additional offices. b. sells off a major portion of its business to another company. c. hires or fires a significant number of employees. d. expands into foreign markets.
B
A public company instituted a clawback policy. What does this mean? a. The company is prohibited from expelling shareholders unless the firm pays a fair price for the minority stock and the expulsion has a legitimate business purpose. b. The company can require the CEO and CFO to reimburse the company for any bonus or profits they recieved from selling company stock within a year of the release of flawed financials. c. At least once every three years, companies must take a nonbinding shareholder vote on the compensation of the five highest-paid executives. d. The company has decided that the compensation level of its executives is not in the company's best interests, so it reduces all executive pay levels by a certain percentage.
B
All the business forms listed below have limited liability EXCEPT the a. corporation. b. general partnership. c. "S" corporation. d. limited liability company.
B
An agency relationship can be created a. only by the meeting of all the standards of contract law. b. by the conduct of the parties. c. only if the agent is paid. d. only by a written agreement.
B
Before filing a derivative lawsuit, shareholders must a. hold a special meeting, and a majority of the shareholders must vote to file the lawsuit. b. notify the board that the corporation has been wronged and ask the board to bring suit in the name of the corporation directly. c. notify the Secretary of State that the corporation has been wronged and ask the Attorney General to file the lawsuit on behalf of the corporation. d. place the lawsuit on the company's proxy statement, and the proposal must receive a majority vote.
B
Carey decided to incorporate her business under the name yStar Inc. Before yStar was incorporated, Carey signed a contract in the name of yStar, Inc. to have some office space remodeled. Which statement is correct? a. yStar is liable on the contract if the contractor knows that the corporation does not yet exist. b. yStar will be liable on the contract only if the corporation adopts the contract. c. yStar is liable on the contract because the contract was signed in its name. d. yStar becomes liable on the contract as soon as it is incorporated.
B
Corporate stock can be divided into categories called ________, which can be further divided into ________. a. debentures, classes b. classes, series c. equity, assets d. authorized shares, classes
B
Dusty dissociated from a partnership. To protect himself from debts of the partnership after he leaves, Dusty should a. demand that the partnership terminate. b. file a statement of dissociation with the Secretary of State. c. execute a formal written agreement with the remaining partners. d. secure an indemnity bond.
B
Ending a partnership involves which of the following three steps? a. Dissociation, winding down, and consummation b. Dissolution, winding up, and termination c. Failure, dividing up, and paying off d. Dissociation, agreement, and dissolution
B
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? a. Five. b. None. c. One. d. Two.
B
In incorporating E-prise, the promoter gave an incorrect ZIP Code for the registered agent. All of the other requirements for incorporation were met. E-prise is a(n) a. corporation by estoppel. b. de jure corporation. c. de facto corporation. d. indemnified corporation.
B
Jill owns a retail business by herself and was sued by a customer who fell in the store. The customer claimed the business was negligent in caring for its floors. Which statement best describes Jill's potential liability? a. Jill can be held personally liable to the customer since she is the owner. b. Jill can only be liable to the amount she initially invested in the business. c. Jill cannot be held personally responsible; the woman's insurance must pay for the claim. d. Jill has no potential liability to the customer.
B
Jim agreed to show Donna's car to a potential buyer. Donna was not able to be home since she had to attend a meeting. After showing the car, Jim left the keys in it and the car was stolen. Which statement is correct? a. Since Jim is a gratuitous agent, he is strictly liable for the loss of the car. b. Since Jim is a gratuitous agent, he will only be liable for the loss of the car if his conduct constitutes gross negligence. c. Since Jim is a gratuitous agent, he will be liable for the loss of the car if his conduct constitutes ordinary negligence. d. Since Jim is a gratuitous agent, he has no liability for the car.
B
Meredith, a shareholder in Quarto, Inc., notified Quarto's board of directors that the corporation had been wronged and asked the board to bring a lawsuit in the corporation's name. In response to Meredith's demand, the board a. can file suit on behalf of the corporation. b. can do any of the above. c. can reject Meredith's demand or simply fail to respond. d. can appoint a Special Litigation Committee
B
Mike is planning on incorporating his business in the state of Delaware. Which of the following regarding the name of Mike's business is TRUE? a. His company name can be the same as another corporation that already exists in Delaware. b. He will be able to use the words "Association" or "Institute" in his company name. c. His company name will not have to include one of the following words: Corporation, Incorporated, Company or Limited. d. He will not be able to use abbreviations (such as Inc. or Corp.) in his company name.
B
Mohammad was an employee in the new product development department of Estay Inc. Mohammad was directly involved in the development of a new product that Estay intended to launch in 6 months. Estay took great care to keep information concerning the new product a secret. Ceries, Inc., a competitor of Estay, persuaded Mohammad to leave Estay to direct Ceries' marketing department. Which statement is correct? a. Mohammad can share with Ceries the confidential information he knows about Estay's new product because his agency relationship with Estay is terminated. b. Mohammad cannot share with Ceries the confidential information he knows about Estay's new product because he has a duty not to disclose confidential information he acquired during the agency. c. Mohammad cannot share with Ceries the confidential information he knows about Estay's new product because of the equal dignities rule. d. Mohammad can share with Ceries the confidential information he knows about Estay's new product because he was directly involved in its development.
B
Mrs. O'Leary hired Jenna to sell her house in Michigan. She executed a power of attorney in favor of Jenna authorizing her to do "anything and everything associated with the sale of real estate, acting as a prudent person." On May 30, Jenna finalized a deal with Brandon for the purchase of the house. Brandon and Jenna signed the real estate contract that day. Jenna learned the next day that Mrs. O'Leary had died May 29. a. The contract is voidable at the option of Brandon. b. The contract is void since the agency terminated May 29. c. The contract is voidable at the option of Mrs. O'Leary's estate. d. The contract is valid since the agency's purpose was achieved before Jenna was notified of Mrs. O'Leary's death.
B
Nancy was a partner of a small business. She could see that the business was beginning to fail and that it was very unlikely it would recover. Not wanting to lose her investment, she asked that the court require the partnership to dissolve since she did not have a legal right to withdraw at that time. Does a court have the authority to order a partnership to dissolve? a. No. A court can only dissolve a partnership at the request of all the partners. b. Yes. A court can dissolve a partnership when it is convinced that the partnership is unlikely to succeed. c. No. A court does not have authority to dissolve the partnership. d. Yes. Under the UPA, if a partner can show the court the business suffered a loss the year before the case was filed, the court can dissolve the partnership.
B
Someone who is not paid for performing duties is a(n) a. fiduciary agent. b. gratuitous agent. c. charitable agent. d. implied agent.
B
The corporate form of business: a. was first allowed in the State of New York around 1811 and is considered to be an American creation. b. was first known and used by the Greeks and then spread through the Romans to England. c. was not known until the advent of the Industrial Revolution. d. is a relatively new concept developed shortly after the Great Depression.
B
The principle of liability stating that an employer is liable for a physical tort committed by an employee acting within the scope of employment and a nonphysical tort of an employee acting with authority is called a. the equal dignities rule. b. respondeat superior. c. fiduciary control. d. apparent authority.
B
The proceeds, if any, of a derivative lawsuit go to a. the board of directors. b. the corporation. c. the shareholders who actually filed the lawsuit. d. the shareholders of the corporation.
B
Under SEC rules, companies a. must solicit proxies because a shareholder meeting is invalid unless a certain percentage of shareholders attend in person or by proxy. b. are required to post the information in the annual report and the proxy statement on their Web site, file it with the SEC, and distribute it to shareholders c. must give each shareholder a proxy, but not a proxy statement or an annual report, if the company is a public company. d. can require electronic delivery of proxy statements to save mailing costs and improve operating efficiency of the corporation.
B
Which of the following can challenge the validity of a de jure corporation? a. The Secretary of State in the state in which the company was incorporated b. No entity can challenge the validity of a de jure corportaion. c. The state in which the company was incorporated as well as any third party d. A majority vote of the shareholders
B
Which of the following is an advantage of a corporation? a. It requires little expense to form a corporation. b. It offers limited liability for its shareholders. c. It is a flow-through tax entity. d. It is easy to form a corporation.
B
Which of the following takeover defenses is evidenced by the target buying back the shark's stock at a premium price? a. Supermajority voting b. greenmail c. poison pill d. blank check
B
Janet was employed as a sales representative for Esday, Inc. An appreciative customer gave her a diamond bracelet for all her hard work on a complicated contract. Can Janet keep the bracelet? a. No. The bracelet is regarded as an unfair trade practice and violates antitrust law. b. No. An agent is not allowed under any circumstances to personally profit as a result of the agency relationship. c. Yes, but only if she discloses the gift to Esday and Esday consents to her keeping the bracelet. d. Yes. The bracelet was given to Janet personally and intended for her.
C
A court may pierce an LLC's veil if a. the LLC has too many members. b. members keep their assests and the assets of the LLC separate. c. members fail to provide adequate capital. d. members treat the LLC like a separate organization.
C
An agent may not engage in inappropriate behavior that reflects badly on the principal. This rule applies to conduct a. during off-duty time. b. only by public officials. c. during both working hours and off-duty time. d. during working hours.
C
Anne and Mike were winding up their partnership. Mike was approached by a person who wanted the partnership to do some work for him. Mike agreed that the partnership would do the work. Generally speaking, in such a situation a. Anne is not liable since she did not consent to the work. b. Anne is not liable since Mike's conduct was wrongful. c. Anne is liable unless she filed a statement of dissolution with the Secretary of State within 90 days of when Mike entered the contract. d. Anne is not liable since the partnership was in the winding up phase.
C
At what stage are the partnership debts paid and the proceeds distributed to the partners? a. During dissolution b. During termination c. During winding-up d. During dissociation
C
Belinda and Franco are partners in a jewelry business. Without Franco's knowledge, Belinda buys a ring from Janice for $2,200. Janice has no reason to question the transaction since she is a regular customer of the store and assumes Belinda has authority to buy her ring. When Franco finds out he is furious and does not want to honor the agreement. Which of the following is TRUE? a. Belinda acted with implied authority and the partnership must honor the transaction. b. Belinda acted with absolute authority and the partnership must honor the transaction. c. Belinda acted with apparent authority and the partnership must honor the transaction. d. Belinda acted with actual authority and the partnership must honor the transaction.
C
Cameron, editor of the local newspaper, assigned to Jim the writing of a story about pollution of a nearby stream. Although Jim used reasonable care in gathering and checking his information, unknown to Jim, the story contained a defamatory statement about Maureen. Maureen reads the story and sues Jim for libel. Cameron, who read and published the story a. need not indemnify Jim for Maureen's claim because Jim should have checked his facts more carefully. b. need not indemnify Jim for Maureen's claim because Jim breached his duty to obey instructions. c. must indemnify Jim for Maureen's claim. d. can recover damages from Jim for any injury to the newspaper resulting from Jim's story.
C
Fashions, Inc. has 12 shareholders. The company is subject to the Model Act. What officers is Fashions, Inc. required to have? a. A president and a secretary, and they can be the same person b. A president, secretary, and treasurer c. Whatever officers are described in the corporate bylaws d. A president, at least one vice-president, a secretary, and a chief financial officer
C
If Kay, a partner in an auction business, has a personal creditor who is aggressive about collecting the debt, a. the creditor cannot attach the partnership property to pay off the debt. b. Kay cannot repay her personal creditor through her partnership assets under any circumstances. c. the creditor can attach partnership profits by obtaining a charging order. d. Kay can sell her share in the partnership to repay the debt, regardless of what her partners want her to do.
C
If a court determines that a manager's corporate decision amounted to self-dealing, a. the manager will automatically be fired. b. the transaction being challenged will be automatically voided. c. the business judgment rule will not apply. d. the manager is automatically personally liable to the corporation.
C
In Delaware, lawsuits involving corporations are tried in a special court called a. corporate court. b. common court. c. chancery court. d. CEO's court.
C
Judy believed that Ray and Don were partners in an automotive repair business. Ray and Don were not partners. Ray owned the business as a sole proprietor. Ray, however, allowed Don, his unemployed brother-in-law, to be around the business. When Judy was having her car repaired, Ray told her "my partner here, Don, will give you a ride to work this morning so you can leave your car here. He will give you a ride back here after work and your car will be done." Judy allowed Don to drive her to work. While riding with Don, Don accidentally ran a stop light and caused an accident. Judy was hurt and claims that both Don and Ray are liable to her. Is she right? a. No. Don was not a partner in the business. b. No. There was no intent to have a partnership. c. Yes. This illustrates a partnership by estoppel. d. No. Don was a dissociated partner.
C
Luella just purchased 5 shares of common stock in TriColor, Inc. for $250. Luella has the right to a. manage the day-to-day business of the corporation. b. require that a proposal be placed in the company's proxy statement to be voted on at the shareholder meeting. c. vote to elect directors. d. set executive compensation.
C
Pamela hired Lena to sell her business. Lena a. can buy the business as long as she qualifies for financing. b. cannot buy the business under any circumstances. c. can buy the business only with Pamela's permission. d. can buy the business as long as the price is fair.
C
Preemptive rights are a. required to be offered to shareholders by the Model Act. b. designed to indemnify managers who act in good faith. c. designed to prevent dilution of a shareholder's ownership in the company. d. not legal in the majority of states.
C
The Federal Trade Commission requires franchisors to a. give prospective franchisees earnings information on the company. b. disclose any litigation the company has ever been involved in. c. give prospective franchisees a franchise disclosure document at least 14 business days prior to the signing of a contract or payment of any money. d. let prospective franchisees know how many franchisees have gone out of business in the prior five years.
C
The Williams Act a. is designed to regulate the conduct of the target company subject to a takeover. b. was established to prohibit corporate defensive tactics. c. is designed to regulate the conduct of those attempting to take over a company. d. was established to resolve conflicts of interests between directors and stakeholders.
C
The form of business ownership that is the MOST easily transferable is the a. general partnership. b. sole proprietorship. c. corporation. d. close corporation.
C
Which of the following is NOT a method to acquire control of a company? a. Buy stock from the shareholders through a tender offer b. Buy the company's assets c. Make an initial public offering d. Merge with the company
C
Which of the following is correct concerning anti-takeover efforts? a. The most effective federal statute has been the Poison Pill Act. b. The Williams Act has been the most effective legislation in regulating of the actions of the target company. c. Most states have passed laws to deter hostile takeovers, but these statutes have not totally eliminated hostile takeovers. d. Federal statutes have been more effective than state statutes in eliminating hostile corporate takeovers.
C
Which of the following statements regarding social enterprises is TRUE? a. The focus of social enterprises is the motto "reduce, reuse, recycle." b. To become a socially conscious organization, one-half of shareholders must approve. c. Unlike charities, social enterprises can sell stock to investors. d. Social enterprises are essentially nonprofit organizations.
C
Which of the following states that a corporation cannot undertake any transaction unless its charter permits it? a. The estoppel doctrine b. The indemnification clause c. The ultra vires doctrine d. The exculpatory clause
C
Which of the following would NOT be personally liable for the debts of the business? a. a sole proprietor b. a partner in a joint venture c. an S corp shareholder d. a partner in a general partnership
C
Amy is on the board of directors of Computers Plus. Computers Plus is looking for a warehouse to purchase. Amy owns a warehouse. In order for Amy to sell her warehouse to Computers Plus a. the transaction must be fair to both Amy and Computers Plus. b. a court must review the opportunity to determine its favorability. c. she must resign her position on the board of directors of Computers Plus before any negotiations for the warehouse begin. d. the disinterested members of the board of directors must approve the transaction.
D
An organization that does not pay income tax on its profits but passes them through to its owners who pay the tax at their individual rates is called a a. tax-free business venture. b. business corporation. c. professional corporation. d. flow-through tax entity.
D
A corporate charter is filed with a. the Securities and Exchange Commission. b. a state's Treasury and/or Revenue Division. c. the United States Department of Commerce. d. a state's Secretary of State office.
D
Alex is a director of ABC, Inc. Alex wants to personally make a major purchase from Bravo Co. If it knew of the opportunity, ABC might be also interested in making that same purchase. Alex must a. advise the boards of both corporations of his conflict of interest. b. resign from the board of directors. c. abandon the idea of making the purchase himself. d. first offer the opportunity to make the purchase to the disinterested directors of ABC or its shareholders.
D
All of the following are characteristics of a closely held corporation EXCEPT a. the corporation can typically operate without a board of directors. b. the shareholders usually restrict share transfer. c. minority shareholders are provided more protection than in regular corporations. d. the shares are publicly traded.
D
All of the following are shareholder rights EXCEPT a. the right to dissent. b. the right to information. c. the right to vote. d. the right to manage the firm.
D
Chance is a traveling marketing representative for a publishing company. He is an independent contractor and was hired without negligence. One afternoon while driving to a meeting, Chance negligently runs a stop sign and causes an accident. Judy is injured. Judy can a. not hold Chance or his company liable for her injury. b. hold both Chance and his company liable for her injury. c. hold the company but not Chance liable. d. hold Chance but not the company liable.
D
Charles owns 1,000 shares of stock in Temperan, Inc. Charles wants to obtain corporate records including the corporation's minute book and accounting records. Under the Model Act, Charles is entitled to this information if he requests it in good faith and a. he is an employee of Temperan. b. he owns at least 1 percent of the company or $2,000 of stock. c. he is a controlling shareholder. d. he has a proper purpose.
D
Ev-R-Green Co., a private corporation, decides to sell substantially all of the company's assets. Under the Model Act and many state statutes a. the sole remedy for dissenting shareholders is to sell their stock on the stock exchange. b. the board must first get unanimous shareholder approval for this fundamental change. c. the company may buy back, at fair value, the stock of any shareholders who object to the decision or the shareholders who object may receive the right of first refusal to purchase corporate assets. d. Ev-R-Green must buy back, at fair value, the stock of any shareholders who object to the decision.
D
Gary and Herman are partners in a lawn mower repair business in Ohio. While Gary is on vacation, visiting his sister in Georgia, his sister's neighbor has trouble with her mower and Gary fixes it for her. She insists on paying him. Gary a. may not accept the money because it would create a conflict of interest. b. may not accept the money because it would mean he was taking a business opportunity away from the partnership. c. may keep the payment since he did the work while he was on vacation. d. must turn the money over to the partnership because he earned it doing the kind of work that the partnership does.
D
John hired Tim to sell his house. Which statement is correct? a. John, but not Tim, can terminate the agency relationship. b. Tim is John's principal. c. Tim, but not John, can terminate the agency relationship. d. John is Tim's principal.
D
Kayla and Marshall formed a partnership. Marshall incurred a debt in the ordinary course of the partnership business. If the debt is not paid, the creditor may sue: a. only Marshall and the partnership in a lawsuit together or the creditor loses any right to sue the partnership. b. only Marshall. c. only the partnership. d. the partnership and the partners together, or in separate lawsuits, or in any combination.
D
Kian is the chief financial officer of Yonkka, Inc. He is also a member of Yonkka's board of directors. Kian is a. a public director. b. holding an illegal position. c. an outside director. d. an inside director.
D
Lucy owns 10 shares of stock in Quamba, Inc. Lucy wishes to place a proposal in a company's proxy statement to be voted on at the shareholders' meeting. Pursuant to the SEC rules, before Lucy is allowed to place her proposal on the proxy statement she must a. have owned continuously for one year at least one percent of the company and $2,000 or more of the stock. b. have been a stockholder for at least two years. c. have the permission of the board of directors. d. have owned continuously for one year at least one percent of the company or $2,000 or more of the stock.
D
MegaCorp purchased 10,000 shares of its own stock that had previously been owned by private investors. The stock MegaCorp repurchased is called a. authorized and unissued. b. repurchased stock. c. authorized and issued. d. treasury stock.
D
Randy, Joan, and Arnie are partners. Their agreement did not address dissociation nor how long the partnership would last. Randy decided to leave the partnership. What happens when Randy serves notice he intends to withdraw? a. The partnership automatically terminates b. The partnership winds down c. The partnership estoppes d. The partnership can either buy him out and continue in business or wind up the business and terminate the partnership
D
Sandy, Ramon, and Bonnie were partners. Sandy dissociated from the partnership. Bonnie and Ramon decided to continue the business. When Sandy dissociated, there was a $50,000 debt owed to Great State Bank. Which statement is correct? a. Whether Sandy remains liable depends on whether she filed a statement of dissociation. b. Only Ramon and Bonnie are liable for the $50,000 debt owed to Great State Bank. c. The debt is extinguished as a result of the dissociation. d. Sandy remains liable on the $50,000 debt owed to Great State Bank.
D
Shareholder proposals on the company proxy statement a. may only address corporate-governance issues and cannot not address the shareholder's political agenda, such as saving the environment. b. will automatically become binding if approved. c. may only be implemented by the company if they receive support from at least a simple majority of the shareholders. d. historically have been rarely approved.
D
Veritas, Inc. is planning its annual shareholder meeting on June 15. The company a. is not required to have an annual shareholders meeting if the company is listed only on the NYSE. b. need not send notices of the meeting to shareholders since it is the regularly scheduled, annual meeting, which Veritas always holds on the third Thursday of June. c. must send notices to everyone who owns stock as of January 1. d. must send notices to everyone who owns stock on the "record date," which can be no more than 70 days before the meeting.
d
