Business Law Test 3
Under the Fair Labor Standards Act, which of the following scenarios is legal? a. 12-year-old Molly works several hours per day on her family's farm picking vegetables b. 14-year-old Luis works full time bagging groceries at a supermarket c. 13-year-old Dianna works five hours per week stocking shelves at a drugstore d. 17-year-old Cole has taken a part-time job as a coal miner working alongside his dad
A. 12 year-old Molly works several hours per day on her family's farm picking vegetables
Under the ADEA, an employer can win a disparate impact case if it can show that the discriminatory decision was based on a reasonable factor other than a. age. b. sex. c. race. d. national origin.
A. Age
The following are all characteristics of Fair Workweek Laws except: a. Allows retaliation against workers who ask for changes in their work schedule. b. Provide 14 days' notice of work schedules. c. Pay workers extra for each shift cancelled on short notice. d. Pay extra for split shifts.
A. Allows retaliation against workers who ask for changes in their work schedule
When can shareholders sue a corporation directly? a. only if their own rights have been violated b. only if the corporation has been wronged c. only if they hold at least 10 percent of company stock d. at any time they wish
A. Anytime they wish
What is it called when union organizers talk with employees and try to persuade them to form a union? a. Campaign b. Petition c. Election d. Authorization Cards
A. Campaign
. A corporation's obligation to voluntarily provide shareholders with financial information a. depends on whether the company is publicly or privately held. b. depends on the requirements of the Model Business Corporation Act. c. is extensive and is carefully regulated by the SEC if the company is privately held. d. depends on the ruling of the board of directors.
A. Depends on whether the company is publicly or privately held
Lamont is an African-American male. His employer tends to give him low-level tasks at work because he does not believe African-Americans are as skilled as other ethnic groups. Under Title VII, Lamont's employer is engaging in which illegal activity? a. disparate treatment b. retaliation c. family responsibility discrimination d. reverse discrimination
A. Disparate treatment
When a partner leaves the partnership, whether it be voluntary or by expulsion, death, or bankruptcy, it is called a. dissociation. b. termination. c. detachment. d. separation.
A. Dissociation
Management's duty to have a rational business purpose, avoid illegal behavior, and make informed decisions refers to its a. duty of care. b. duty of loyalty. c. duty of openness. d. duty of fairness.
A. Duty of care
A "fundamental change" in a corporation would be illustrated by a. E-prise, Inc. merging with Vitta Corporation. b. E-prise electing new members to the board. c. Vitta Corporation adding a new product to its product line. d. Vitta Corporation setting the date for its annual meeting.
A. E-prise, Inc. merging with Vitta Corporation.
Under the federal legislation known as OSHA, a. employers must keep records of all workplace injuries. b. employers must keep records of positive results of workplace drug tests. c. employers must keep a record of recognized hazards used in the workplace. d. employers may monitor workers' email messages if the monitoring is done in the ordinary course of business and the employer provides the email system.
A. Employers must keep records of all workplace injuries
On the day a tender offer begins, a. greenmail must be sent to the SEC. b. a bidder must file a disclosure statement with the SEC. c. assets of the target corporation must be locked up until an inventory is completed. d. the SEC issues a binding order to the target company to file audited financial statements to the bidder.
B. A bidder must file a disclosure statement with the SEC
An organization that does not pay income tax on its profits but passes it through to its owners who pay the tax at their individual rates is called a a. business corporation. b. flow-through tax entity. c. tax-free business venture. d. professional corporation.
B. A flow-through tax entity
Which Supreme Court case had the most influence on the passage of the Civil Rights Act of 1964? a. Plessy v. Ferguson b. Brown v. Board of Education c. Roe v. Wade d. Griggs v. Duke Power
B. Brown v. Board of Education
Corporate stock can be divided into categories called ________, which can be further divided into ________. a. authorized shares; classes b. classes; series c. equity; assets d. Debentures; classes
B. Classes; Series
The form of business ownership that is the MOST easily transferable is the a. general partnership. b. corporation. c. close corporation. d. sole proprietorship.
B. Corporation
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 also might be interested in making that same purchase. Alex must a. advise the boards of both corporations of his conflict of interest. b. first offer the opportunity to make the purchase to the disinterested directors of ABC or its shareholders. c. resign from the board of directors. d. abandon the idea of making the purchase himself
B. First offer the opportunity to make the purchase to the disinterested directors of ABC or its shareholders.
MegaCorp is incorporated under Delaware law. It is registered to do business in New York. Legally, in New York MegaCorp is known as what kind of corporation? a. domestic b. foreign c. secondary d. cumulative
B. Foreign
All the business forms listed below have limited liability EXCEPT the a. limited liability company. b. general partnership. c. S corporation. d. corporation
B. General partnership
Maxine lost her job as an electrical engineer with a large company that had provided health insurance benefits for Maxine and her family. She now a. must try to find insurance on her own or try to find another job with health insurance benefits. b. is protected under COBRA, which allows her continued health insurance coverage for 18 months as long as she pays the cost. c. is protected under COBRA, which requires her employer to continue her health insurance coverage for six months under whatever copayment arrangements she had while she was employed. d. has some protection under the NLRA, which requires her employer to pay for continued health insurance for three months following her termination if she did not leave the company voluntarily
B. Is protected under COBRA, which allows her continued health insurance coverage for 18 months as long as she pays the cost
Which is an advantage of a sole proprietorship? a. It can offer multiple classes of stock. b. It is very easy to form. c. It can attract a wide variety of shareholders. d. It offers its owner limited liability.
B. It is very easy to form
Which of the following describes the duty of loyalty? a. It requires managers to make decisions they reasonably believe to be in the best interest of the corporation. b. It prohibits managers from making a decision that benefits them at the expense of the corporation. c. It requires consideration of the interests of the surrounding community. d. It requires using care that an ordinarily prudent person would take in a similar situation.
B. It prohibits managers from making a decision that benefits them at the expense of the corporation.
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 has no potential liability to the customer. b. Jill can be held personally liable to the customer since she is the owner. c. Jill can only be liable up to the amount she initially invested in the business. d. Jill cannot be held personally responsible; the woman's insurance must pay for the claim
B. Kill can be held personally liable to the customer since she is the owner
Which of the following workers is entitled to unpaid leave under the Family and Medical Leave Act? a. Stanley, who works part time for a small coffee shop with 10 employees. b. Marianne, who has worked full time for five years with Microsoft. c. Dakota, who works part time for Delta Air Lines. d. All of these are correct.
B. Marianne, who has worked full time for five years with Microsoft
Antitakeover tactics include all EXCEPT a. blank check preferred stock. b. negative tender offers. c. greenmail. d. poison pills
B. Negative tender offers
What term identifies stock that has been authorized and sold? a. authorized and paid stock b. outstanding stock c. treasury stock d. authorized and unissued stock
B. Outstanding Stock
Charles and Ellen, an unmarried couple, run an ice cream store. The business is not incorporated, and they have filed no formation papers with the state. Their business is a a. sole proprietorship. b. partnership. c. franchise. d. limited liability company.
B. Partnership
Under the Model Act, a corporation must have at least one director unless all shareholders agree to eliminate the board or the corporation has fewer than _____ shareholders. a. 10 b. 25 c. 50 d. 100
C. 50
In many ways, a limited liability company can be thought of as a cross between a. a corporation and a franchise. b. a joint venture and a partnership. c. a corporation and a sole proprietorship. d. a sole proprietorship and a social enterprise.
C. A corporation and a sole proprietorship
The percentage of voters who must be present for a meeting to count is referred to as a. a plurality. b. simple majority. c. a quorum. d. a proxy.
C. A quorum
A staggered board of directors is an example of a. a hostile takeover maneuver. b. a special committee. c. a shark repellent. d. None of these are correct.
C. A shark repellent
Madeline—a White woman—applied for a job as an attendant in a men's bathroom at a fancy hotel. The hotel refused to hire her. A court would be likely to rule in favor of the hotel on the basis of which BFOQ? a. authenticity b. merit c. privacy d. reverse discrimination
C. Privacy
Which statute prohibits discrimination on the basis of disability by the federal government, federal contractors, and all entities that receive federal funds? a. the Civil Rights Act of 1866 b. the Equal Pay Act of 1963 c. the Rehabilitation Act of 1973 d. the Family and Medical Leave Act of 1993
C. The Rehabilitation Act of 1973
The percentage increase in stock price appreciation and dividends is referred to as a. net returns on invested capital. b. price/earnings ratio. c. total shareholder return. d. financial leverage ratio.
C. Total shareholder return
Fashions, Inc. has 12 shareholders. The company is subject to the Model Act. What officers is Fashions, Inc. required to have? a. a president, secretary, and treasurer b. a president and a secretary, and they can be the same person c. a president, at least one vice-president, a secretary, and a chief financial officer d. whatever officers are described in the corporate bylaws
D. Whatever officers are described in the corporate bylaws
orning Consumer Products Co. asks its employees to apply four tests in determining whether their behavior violates Title VII with respect to sexual harassment. Which of the following is one of the four tests? a. Would your friends be impressed with your behavior? b. Do you think your behavior is humorous? c. Would your behavior help you to get a promotion? d. Would you like your behavior reported in your local newspaper?
D. Would you like your behavior reported in your local newspaper?
What is an exculpatory clause? a. a requirement that the company pay the legal fees of directors who are sued for actions taken on behalf of the company b. a provision that if a party enters into a contract believing in good faith that the corporation exists, he cannot later take advantage of the fact that it does not c. a requirement that a corporation cannot undertake any transaction unless the charter permits it d. a provision that protects directors from personal liability to the corporation and its shareholders
D. a provision that protects directors from personal liability to the corporation and its shareholders
The Age Discrimination in Employment Act protects persons a. between 30 and 65 years of age. b. age 70 and older. c. between 45 and 70 years of age. d. age 40 and older.
D. age 40 and older
Secondary boycotts a. are generally legal provided the boycott is peaceful. b. are generally legal provided the boycott does not involve public employees such as nurses or school teachers. c. are not expressly permitted nor prohibited under federal law. d. are generally illegal.
D. are generally illegal
Laurie is incorporating her business. Laurie's home state is Wisconsin. Business will be conducted in California, Michigan, Pennsylvania, and Virginia. Laurie a. must incorporate the business in Wisconsin, the home state. b. must incorporate the business in Wisconsin, California, Michigan, Pennsylvania, and Virginia. c. must incorporate in Delaware. d. can incorporate the business in any state.
D. can incorporate the business in any state
Under the Americans with Disabilities Act, a person with a disabling illness a. is not considered disabled once the illness is being managed with medicines. b. is not considered disabled unless there is no known cure. c. is considered disabled, but only at times when hospitalization is required for treatment. d. is considered disabled, even if the illness is under control.
D. is considered disabled, even if the illness is under control
Title VII of the Civil Rights Act of 1964 applies to employers with any number of employees, making it illegal to discriminate on the basis of race, color, religion, sex, or national origin.
False
To adopt a contract means to form a new contract with different parties
False
To be a close corporation, the business must be small, with no more than 20 owners and no more than $500,000 in gross annual income.
False
To form an LLC, both a charter and an operating agreement must be filed with the secretary of state in the jurisdiction where the business will operate.
False
Under the Family and Medical Leave Act, an employee can take up to 12 weeks of paid leave each year for certain personal and family illness situations.
False
When a corporation accepts legal responsibility for a contract, it is called novation.
False
Disparate impact applies if the employer has a rule that on its face is not discriminatory, but in practice excludes too many people in a protected group and the rule is not a job-related business necessity.
True
Generally speaking, an employer does not have to give workers a day off on their religious Sabbath if doing so would cause an undue hardship for the employer.
True
Generally, a joint venture is a partnership created for one limited purpose.
True
Generally, managers that make informed decisions will not be liable even if their decision turned out badly.
True
If partners wish to maintain having protection against personal liability, it is essential to comply with all the technicalities of a limited liability partnership statute
True
In a derivative lawsuit, any proceeds awarded by the court must be paid to the corporation, not the shareholders themselves.
True
In almost half of all states, Bring Your Gun to Work Laws prohibit companies from banning firearms in their parking lot.
True
In order to be considered sexual harassment, behavior must be so severe that it interferes with an employee's ability to work.
True
In reality, the officers of the large corporations have a great deal of influence on who will be nominated and elected as directors.
True
In the absence of a specific law to the contrary, employers have the right to fire workers for off-duty conduct.
True
Larry has owned $25,000 of stock in E-prise, Inc. for the past 18 months. Under SEC rules, Larry can require that one proposal be placed in the company's proxy statement to be voted on at the shareholder meeting.
True
No formal steps are necessary to create a sole proprietorship.
True
Poison pill (aka shareholder rights plan) are plans that interfere with an outsider's ability to buy company stock
True
Promoters are personally liable on any contract they sign before the corporation is formed.
True
Retaliation means that an employer has done something that would deter a reasonable worker from complaining about discrimination.
True
Sara decided to incorporate her business under the name Gomo, Inc. Before Gomo was incorporated, Sara signed a contract in the name of Gomo, Inc. to lease a store front. Sara did not tell the other party that Gomo was not yet formed. Sara is personally liable on the lease.
True
Social enterprises are organizations that pledge to behave in a socially responsible manner, even as they pursue profits.
True
Some courts have held that employee handbooks create binding contract terms.
True
The Civil Rights Act of 1866 offers plaintiffs the possibility of higher compensatory and punitive damage awards than plaintiffs who file under the Civil Rights Act of 1964.
True
The EEOC is the federal agency responsible for enforcing Title VII
True
The NYSE and NASDAQ both require that the members of the nominating committee be independent directors who are less likely to simply go along with whatever the CEO wants.
True
The National Labor Relations Act guarantees employees the right to join unions
True
The management and union at TriColor have bargained for two years without reaching an agreement. After notifying the union, TriColor prohibits the workers from entering the factory to work. This is a lockout.
True
Under both state and federal law, a shareholder can generally revoke a proxy at any time.
True
Valley Mart told its employees that they would be fired if they actively supported a unionizing effort. Valley Mart has committed an unfair labor practice.
True
When a company dissolves, preferred stockholders typically have the right to receive their share of corporate assets before common shareholders.
True
Wrongful discharge in essence, is the public policy rule that prohibits an employer from firing a worker for reasons which would violate fundamental social rights, duties, or responsibilities.
True
Zach decides to incorporate his business under the name of "Zamm." In addition to "Zamm," the Model Act requires that Zach include one of the following words: "corporation," "incorporated," "limited," or "company."
True
A limited liability company, unlike an S corporation, can have members that are corporations, partnerships, or nonresident aliens
True
Quid pro quo sexual harassment cases involve coworkers making offensive jokes or rude comments or displaying pornographic materials, but not sexual offers or requests.
False
Race may be a bona fide occupational qualification (BFOQ) when the employee will be working with children of a different race.
False
Sit-down strikes, in which members stop working but remain at their job posts, physically blocking replacement workers from taking their places are legal.
False
States are not involved in the regulation of corporate takeovers
False
Stock is divided into categories called series, and these series can be further divided into subcategories called classes.
False
Tender offers are regulated on the federal level by the National Labor Relations Act.
False
Terminating a corporation is a three-step process: dissolution, winding up, and termination.
False
The "business judgment rule" has been replaced by "good-faith statutes" in most states.
False
The Employee Retirement Income Security Act (ERISA) requires employers to establish pension plans for employees.
False
The Williams Act regulates the conduct of the target company in a takeover situation
False
The lawyer who forms the corporation cannot legally serve as its incorporator.
False
The most common form of business ownership is the corporation.
False
There is a higher percentage of workers in labor unions now than at any other point in history.
False
A manager who first offers an opportunity to disinterested directors or shareholders who turn it down has the right to take advantage of the opportunity herself
True
A manager who has engaged in self-dealing has violated the duty of loyalty to the corporation unless the self-dealing was entirely fair to the corporation.
True
A public offer to buy a block of stock directly from shareholders is called a tender offer.
True
A speculator plans to acquire control of Kelp Corporation and then resell it at a profit. A speculator is sometimes known as a corporate raider.
True
Alberta is not employed by E-prise, Inc. but she is a member of E-prise's board of directors. Alberta is an outside director.
True
As a general rule, an employer may not discharge a worker for exercising a legal right if that right supports public policy
True
Common stock is the last stock in line for any corporate payouts, including dividends and liquidation payments
True
Corporations have perpetual existence
True
Directors have the authority to manage the corporate business.
True
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. He will be able to use the words "Association" or "Institute" in his company name. b. He will not be able to use abbreviations (such as Inc. or Corp.) in his company name. c. His company name will have to include one of the following words: Corporation, Incorporated, Company, or Limited. d. His company name can be the same as another corporation that already exists in Delaware.
A. He will not be able to use the words association or institute in his company name
Which is the best definition of "employment at will"? a. In the absence of a specific legal exception, an employee can be fired for any reason. b. Once hired, employees are free to choose whatever job they want to have. c. An employee can leave a company at any time and for any reason. d. Employees have a legal right to organize and join labor unions.
A. In the absence of a specific legal exception, an employee can be fired for any reason
Orson was fired from his job behind the ticket counter at the airport. He was loudly told to put his personal belongings into a plastic bag and was led out by security guards in front of his coworkers and customers. His supervisor told him not to return. Orson's employer faces potential liability for a. intentional infliction of emotional distress. b. whistleblowing. c. defamation. d. violation of the FLSA.
A. Intentional infliction of emotional distress
Laura intends to file a Title VII lawsuit against her employer. Which of the following is true? a. Laura is required to first submit her claim to the Equal Employment Opportunity Commission. b. Laura must first submit her claim to a state civil rights commission before she may proceed with her lawsuit. c. If the EEOC determines Laura has no case against her employer, she may not file a lawsuit. d. Laura may initiate a lawsuit or file with the EEOC as she so elects.
A. Laura is required to first submit her claim to the Equal Employment Opportunity Commission
Which of the following is correct concerning antitakeover efforts? a. Most states have passed laws to deter hostile takeovers, but these statutes have not totally eliminated hostile takeovers. b. Federal statutes have been more effective than state statutes in eliminating hostile corporate takeovers. c. The most effective federal statute has been the Poison Pill Act. d. The Williams Act has been the most effective legislation in regulating the actions of the target company.
A. Most states have passed laws to deter hostile takeovers, but these statutes have not totally eliminated hostile takeovers.
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. none b. one c. two d. five
A. None
Which of the following takeover defenses is also known as a shareholder rights plan? a. poison pill b. blank check c. supermajority voting d. greenmail
A. Poison pill
Which of the following can never be a bona fide occupational qualification? a. race b. religion c. sex d. None of these are correct
A. Race
A social enterprise must do all of the following EXCEPT a. register with the state as a nonprofit organization. b. state in its charter that it is a benefit corporation. c. obtain approval of its charter from two-thirds of its shareholders. d. measure its social benefit using a standard set by an objective third party.
A. Register with the state as a nonprofit organization
A corporation must obtain shareholder approval before the company a. sells off a major portion of its business to another company. b. opens additional offices. c. hires or fires a significant number of employees. d. expands into foreign markets.
A. Sells off a major portion of its business to another company
The term "S Corporation" comes from a. the Internal Revenue Code. b. the FTC rules. c. the Securities and Exchange Commission. d. state corporation law.
A. The Internal Revenue Code
A public company instituted a clawback policy. What does this mean? a. The company can require the CEO and CFO to reimburse the company for any bonus or profits they received from selling company stock within a year of the release of flawed financials. b. At least once every three years, companies must take a nonbinding shareholder vote on the compensation of the five highest-paid executives. c. 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. 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.
A. The company can require the CEO and CFO to reimburse the company for any bonus or profits they received from selling company stock within a year of the release of flawed financials
A union declares it will be engaging in a partial strike whereby its employees will alternate between working for a period of time and then walking off the job for an indefinite time. Thus, employees may work for a few days or only a few hours before walking off the job again. The employer claims the union does not have the legal right to engage in a partial strike. Which statement is correct? a. The employer is correct. The union must either strike or work, it cannot alternate between working and striking. b. The employer is correct only if the union does not state the specific hours or days workers will be off the job. The law requires the union to provide the employer with at least seven days' notice of when workers will be off the job. c. The employer is not correct since the NLRA expressly states workers have a right to engage in a partial strike. d. Whether the employer is correct depends on state law
A. The employer is correct. The union must either strike or work, it cannot alternate between working and striking
Which of the following is TRUE in cases based on claims of disparate treatment? a. The plaintiff must prove that the defendant intentionally discriminated. b. The defendant must have made a disparaging remark about the plaintiff. c. The defendant must prove that the plaintiff is not qualified for the position. d. The plaintiff must prove that they were discriminated against because of their education level.
A. The plaintiff must prove that the defendant intentionally discriminated
All of the following are shareholder rights EXCEPT a. the right to manage the firm. b. the right to vote. c. the right to information. d. the right to dissent.
A. The right to manage the firm
RayCorp offers to buy out MegaCorp by paying $69 per share. LandCo, who also wants to buy MegaCorp, offers to pay $75 per share. When the bidding process is finally over, RayCorp has offered $85 per share and LandCo has offered to pay $90 per share. MegaCorp agrees to sell to RayCorp on grounds that, all things considered, the takeover by RayCorp would be better for the business. LandCo claims that MegaCorp should have sold the company to it since it was the highest bidder. Is LandCo correct? a. Yes. This is a breach of duty. MegaCorp must sell the company to the highest bidder; it cannot give preferential treatment to a lower bidder. b. No. This is covered by the Williams Act. c. No. The directors have broad discretion in deciding to whom to sell the company. d. No. MegaCorp is acting in good faith by considering all things, not just the offering price of the shares.
A. Yes. This is a breach of duty. MegaCorp must sell the company to the highest bidder, it cannot give preferential treatment to a lower bidder.
What is greenmail? a. a takeover defense in which the target buys back the shark's stock at a premium price b. a takeover defense where the target sells off the assets that the takeover company most wants c. a takeover strategy in which one company buys stock from the shareholders of the target firm d. a takeover defense where the target effectively limits how large a block of stock an investor can buy
A. a takeover defense in which the target buys back the shark's stock at a premium price
Kian is the chief financial officer of Yonkka, Inc. He is also a member of Yonkka's board of directors. Kian is a. an inside director. b. an outside director. c. holding an illegal position. d. a public director.
A. an inside director
Courts agree in principle that any decision that has no rational business purpose a. automatically violates the business judgement rule. b. can be challenged and will be automatically voided. c. is automatically in violation of the Wrigley Act. d. means the manager will automatically be fired.
A. automatically violates the business judgement rule
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. de jure corporation. b. de facto corporation. c. corporation by estoppel. d. indemnified corporation.
A. de jure corporation
There are four types of illegal activity under the Civil Rights Act of 1964. Which choice lists these four? a. disparate treatment, disparate impact, hostile environment, and retaliation b. disparate employment, unfair promotions, hostile environment, and unfair firing c. false reports, retaliation, prima facie discrimination, sexual harassment d. religious disparaging, racial profiling, sexual harassment, unfair promotions
A. disparate treatment, disparate impact, hostile environment, and retaliation
Employees of Truan went on strike because of unfair labor practices. After the strike, the striking workers are a. entitled to get their jobs back. b. not entitled to get their jobs back. c. entitled to get their jobs back but only as they become available. d. fired.
A. entitled to get their jobs back
The Federal Trade Commission requires franchisors to a. give prospective franchisees a Franchise Disclosure Document at least 14 business days prior to the signing of a contract or payment of any money. b. give prospective franchisees earnings information on the company. c. disclose any litigation the company has ever been involved in. d. let prospective franchisees know how many franchisees have gone out of business in the prior five years.
A. give prospective franchisees a Franchise Disclosure Document at least 14 business days prior to the signing of a contract or payment of any money
In the late 1960s, a shareholder of the company that owned the Chicago Cubs baseball team sued the company because the directors refused to install lights in Wrigley Field. The court decided that the directors a. had a rational purpose for not installing lights and were not liable for doing anything improper. b. were not protected by the business judgment rule. c. had not acted with any rational purpose and were liable to its shareholders for damages caused by their actions. d. had the right to make decisions for the team without any concern for the desires of the shareholders.
A. had a rational purpose for not installing lights and were not liable for doing anything improper.
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 has a proper purpose. b. he owns at least 1 percent of the company or $2,000 of stock. c. he is an employee of Temperan. d. he is a controlling shareholder.
A. he has a proper purpose
Under most state statutes, a corporation may a. include in its charter a provision indemnifying directors unless they have engaged in intentional misconduct or bad faith. b. include in its charter a provision indemnifying directors under any circumstances in the conduct of their duties for the corporation. c. not include in its charter a provision indemnifying directors who engage in negligent conduct of their duties. d. not include in its charter any provisions regarding indemnification of directors.
A. include in its charter a provision indemnifying directors unless they have engaged in intentional misconduct or bad faith
In a derivative lawsuit, the named plaintiff a. is the corporation on whose behalf the lawsuit is filed. b. is the particular class of shareholders primarily injured by the wrong. c. consists of all the corporation's shareholders. d. is the board of directors for the corporation.
A. is the corporation on whose behalf the lawsuit is filed
A court may pierce an LLC's veil if a. members fail to provide adequate capital. b. members treat the LLC like a separate organization. c. members keep their assets and the assets of the LLC separate. d. the LLC has too many members.
A. members fail to provide adequate capital
Harold and Zack have pooled their money together to buy real estate but have filed no formal papers to form a business. Harold, a lawyer, handles all the legal matters and Zack, a real estate broker, finds buyers for the property they have subdivided. Harold and Zack are engaged in a a. partnership. b. close corporation. c. limited liability company. d. professional corporation.
A. partnership
The person who creates a corporation is called the a. promoter. b. partner. c. agent. d. incorporator.
A. promoter
Under the Model Act, who has the right to call a special meeting of the shareholders to vote on an emergency issue that cannot wait until the next annual meeting? a. the board of directors and shareholders who own at least 10 percent of a company's stock b. any group of shareholders that is at least 25 in number and holds 25 percent of a company's stock c. the board of directors and the CEO d. only the board of directors
A. the board of directors and shareholders who own at least 10 percent of a company's stock
Who signs the charter and files it with the secretary of state? a. the incorporator b. the chairman of the board c. the promotor d. the company president
A. the incorporator
All of the following are characteristics of a closely held corporation EXCEPT a. the shares are publicly traded. b. the corporation can typically operate without a board of directors. c. the shareholders usually restrict share transfer. d. minority shareholders are provided more protection than in regular corporations.
A. the shares are publicly traded
Under the Williams Act, a. the target company must state its position on a tender offer within ten days of its commencement. b. a bidder must keep a tender offer open for at least 30 business days initially. c. no shareholder may withdraw acceptance of the tender offer while the offer is still open. d. All of these are correct.
A. the target company must state its position on a tender offer within ten days of its commencement.
Which of the following states that a corporation cannot undertake any transaction unless its charter permits it? a. the ultra vires doctrine b. the estoppel doctrine c. the exculpatory clause d. the indemnification clause
A. the ultra vires doctrine
Jessica was a former employee of Mark. When potential employers called Mark for a reference about Jessica, he stated she was not a very good worker and had been fired for excessive absences. He said he had reason to believe Jessica was on drugs, but he wasn't absolutely certain. Jessica learned what Mark was saying and sued him. In most states a. under the qualified privilege rule, it was legal for Mark to say what he said if it was true and Mark was not motivated by ill will. b. it was legal for Mark to say what he said, since courts have consistently ruled that former employers are immune from lawsuits for giving references. c. it was not proper for Mark to say what he said, since courts have consistently ruled that former employers should not give references over the telephone or in writing without the former employee's written authorization. d. though it was proper for Mark to talk about Jessica's work-related history, he should have refrained from talking about her potential drug use.
A. under the qualified privilege rule, it was legal for Mark to say what he said if it was true and Mark was not motivated by ill will
The corporate form of business a. was first known and used by the Greeks and then spread through the Romans to England. b. was not known until the advent of the Industrial Revolution c. was first allowed in the State of New York around 1811 and is considered to be an American creation. d. is a relatively new concept developed shortly after the Great Depression.
A. was first known and used by the Greeks and then spread through the Romans to England
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. the disinterested members of the board of directors must approve the transaction. c. she must resign her position on the board of directors of Computers Plus before any negotiations for the warehouse begin. d. a court must review the opportunity to determine its favorability
B. The disinterested members of the board of directors must approve the transation
Which is true of an S corporation? a. There can be no more than 50 shareholders. b. There can be only one class of stock. c. A majority of shareholders must agree the company should be an S corporation. d. All of these are correct.
B. There can be only one class of stock
What is the first step that must be taken to terminate a corporation? a. filing b. vote c. revocation d. winding up
B. Vote
When may an employer require an employee to submit to a lie detector test? a. when the employee has been hired for less than 90 days b. when the test is part of an ongoing investigation into crimes that have occurred c. when the employer has reason to believe the employee is using illegal drugs on the job d. when all employees are being questioned using a lie detector
B. When the test is part of an ongoing investigation into crimes that have occured
Benjamin sits on the board of directors of Litman Corporation. He has the support of only 30 percent of Litman's shareholders. Benjamin is best characterized as a(n) a. independent director. b. zombie director. c. inside director. d. outside director.
B. Zombie director
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 1 percent of the company and $25,000 or more of the stock. b. have owned continuously for one year at least 1 percent of the company or $25,000 or more of the stock. c. have the permission of the board of directors. d. have been a stockholder for at least two years.
B. have owned continuously for one year at least 1 percent of the company or $25000 or more of the stock
Quick Supply House breached a contract with MegaCorp. The breach resulted in the loss of a great deal of money to MegaCorp. The board of directors for MegaCorp vote not to sue the supply house since it believes the legal costs would be more than it would probably recover. If a group of shareholders wish to sue the supply house, this would a. be a type of direct lawsuit. b. have to be a derivative lawsuit. c. be a settlement lawsuit. d. be an SEC lawsuit.
B. have to be a derivative lawsuit
In which case did the court find managers liable, even though the special committee and shareholders approved a self-dealing transaction? a. Anderson v. Bellino b. In re Dole Food Co. c. Unocal Corp. v. Mesa Petroleum Co. d. RSL Communications v. Bildirici
B. in re Dole Food Co.
What type of transaction employs special committees made up of disinterested board members who review the transaction to determine if it is entirely fair to the corporation? a. hostile takeover b. self-dealing c. rational business purpose d. corporate opportunity
B. self-dealing
Courts have long ruled that corporate directors and officers owe a fiduciary duty to a. the corporation only. b. the corporation and shareholders. c. shareholders only. d. society at large.
B. the corporation and shareholders
Shareholders must begin the litigation process by asking the board of directors to bring suit, an action called a. proxy access. b. proper purpose. c. making demand. d. benchmarking.
C making demand
Which of the following is TRUE about affirmative action? a. Affirmative action is required by Title VII. b. Affirmative action is prohibited by Title VII. c. Affirmative action is allowed in government contracts if it can show the programs are needed to overcome specific past discrimination. d. Affirmative action programs are usually voluntary on the part of employers, since courts have no power to order remedies for past discrimination.
C. Affirmative action is allowed in government contracts if it can show the programs are needed to overcome specific past discrimination
Conversion rights a. specify the order in which classes of stockholders are paid upon dissolution. b. are designed to prevent dilution of a shareholder's ownership in the company. c. allow investors to convert to a different class. d. establish whether shareholders are entitled to dividends
C. Allow investors to converts to a different class
The Levitt Corporation charter authorizes 500,000 shares of stock. This stock is referred to as a. treasury stock. b. preferred stock. c. authorized stock. d. common stock.
C. Authorized stock
Mark was refused employment at a Christian bookstore because he was not a "born-again Christian." If Mark brings a Title VII action against the bookstore, the bookstore's best defense would be a. it did not discriminate against a protected category. b. Title VII doesn't apply to private businesses. c. being a "born-again Christian" is a bona fide occupational qualification. d. it could not reasonably accommodate Mark.
C. Being a "born-again Christian" is a bona fide occupational qualification
The Model Business Corporation Act states: "All corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation managed by or under the direction of, its a. shareholders." b. officers." c. board of directors." d. executive committee."
C. Board of directors"
Which of the following statements is correct with respect to state efforts to offer protection to companies targeted for hostile takeovers? a. Courts offer the only legal protection to companies targeted for hostile takeovers. b. Statutory law offers the only legal protection to companies. c. Both statutory law and the state courts have provided some degree of protection for companies. d. State courts and state statutes have offered no protection for companies targeted for hostile takeovers.
C. Both statutory law and the state courts have provided some degree of protection for companies
The business judgement rule is designed to protect a. only the manager. b. only the manager's decision. c. both the manager and the manager's decision. d. a business from a conflict of interest.
C. Both the manager and the manager's decision
Alfred has been working for Canyon, Inc. for 12 years, with regular positive performance reviews and promotions. Roger has only been working for Canyon for 3 years. Alfred also has more management qualifications. Yet when a management position is open, Alfred's supervisor advises that Alfred should NOT be promoted to that position. His reason is that he has recently learned that Alfred regularly attends a Narcotics Anonymous support group. Although Alfred has been clean for 16 years, there is fear that he could relapse. What is true? a. Canyon is allowed to make past drug abuse a barrier to management positions. b. Although Canyon's behavior is unethical, it is not prohibited. c. Canyon's behavior is prohibited by the Americans with Disabilities Act. d. Canyon's behavior is not prohibited by the Americans with Disabilities Act, but it is prohibited by Title VII of the Civil Rights Act.
C. Canyon's behavior is prohibited by the Americans with Disabilities Act
Daniel, his parents, and three brothers own all the stock of their family farm corporation, and each person takes an active role in managing the enterprise. This corporation, which is taxed as a corporation, is most likely a(n) a. S corporation. b. professional corporation. c. close corporation. d. proprietorship.
C. Close corporation
Most franchisors and franchisees are a. partnerships. b. sole proprietorships. c. corporations or LLCs. d. social enterprises.
C. Corporations or LLCs
Which of the following questions could an interviewer safely ask a candidate in a job interview? a. "Are you a United States citizen?" b. "When did you graduate from college?" c. "Could you carry a 100-pound weight, as required by this job?" d. "Are you married?"
C. Could you carry a 100-pound weight, as required by this job
Debra wanted to form a partnership with Lawrence. He agreed and they became co-owners in an equal partnership. This year, after expenses, the partnership had a profit of $200,000. How will the taxation of this profit be handled? a. Since the partnership was Debra's idea, she will pay income tax on the profit on her personal tax return. b. The business will pay half of the tax liability, and Debra and Lawrence will pay the other half. c. Debra and Lawrence must both pay tax on the business's profit. d. The business itself will pay the taxes on the business's profit.
C. Debra and Lawrence must both pay tax on the business's profits
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. Ev-R-Green must buy back, at fair value, the stock of any shareholders who object to the decision. d. 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.
C. Ev-R-Green must buy back, at fair value, the stock of any shareholders who object to the decision
What federal agency requires that the seller of a franchise give the potential buyer a Franchise Disclosure Document (FDD) and audited financial statements? a. the Securities and Exchange Commission (SEC) b. the Interstate Commerce Commission (ICC) c. the Federal Trade Commission (FTC) d. the Franchise Sales Commission (FSC)
C. FTC
Which of the following statements is TRUE regarding immigration under Title VII? a. An interviewer cannot ask an applicant if they are authorized to work in the United States. b. Once hired, a person must show three forms of evidence proving they are authorized to work in the United States. c. It is illegal for employers to discriminate against non-citizens because "national origin" is a protected category. d. Once hired, employers must turn I-9 records over to the immigration office.
C. It is illegal for employers to discriminate against non-citizens because "national origin" is a protected category
Ron and several fellow workers of Vicy, Inc., a small manufacturing company, wished to organize a union. When Vicy learned of this activity, it issued a bulletin to all workers stating that a union would only hurt the company and that "we are a family that can solve any problems ourselves -- we do not need union activists from outside our company trying to tell us what to do!" Which statement is correct concerning the bulletin issued by Vicy? a. Vicy has committed an unfair labor practice. Vicy must remain neutral during the organizing drive. b. Vicy has committed an unfair labor practice. The bulletin constitutes outrageous interference with the union organizing campaign. c. Vicy has not committed an unfair labor practice. An employer may vigorously present anti-union views to its employees. d. Whether Vicy has committed an unfair labor practice depends on whether the bulletin was approved by the NLRB.
C. Vicy has not committed an unfair labor practice. An employer may vigorously present anti-union views to its employees.
MegaCorp is incorporated in the state of Delaware and is registered only in Delaware. Jolene purchased a MegaCorp product from a company's sales representative following a presentation in Michigan. Jolene was seriously injured by the product in Michigan. Under the Model Act, if Jolene sues in Michigan, can MegaCorp defend the suit there?
C. Yes, MegaCorp can defend against a lawsuit in Michigan regardless of whether MegaCorp is registered to do business in that state
The phrase "piercing the company veil" applies to which type of organization? a. a close corporation b. a general partnership c. a limited liability company d. an S corporation
C. a limited liability company
Which of the following would NOT be personally liable for the debts of the business? a. a sole proprietor b. a partner in a general partnership c. an S corporation shareholder d. a partner in a joint venture
C. an S corporation shareholder
What is a whistleblower? a. an employee who thwarts an attempt by fellow employees to form a union b. an employee who crosses the picket line to return to work c. an employee who discloses illegal behavior on the part of his or her employer d. an employee who secretly gives information to his or her employer about union activity
C. an employee who discloses illegal behavior on the part of his or her employer
The executives of Jornaginn Corporation have decided they need to sell 50,000 additional shares of stock to finance their expansion plans. The executives a. cannot sell that many shares unless they were authorized initially in the corporate charter. b. can sell as many shares as the market will bear. c. are limited by the number of shares authorized in the corporate charter, but this number can be increased by amending the charter and paying a fee. d. can sell the shares only if the shares have a par value that is close to the current market price.
C. are limited by the number of shares authorized in the corporate charter, but this number can be increased by amending the charter and paying a fee
Which of the following is NOT an advantage to plaintiffs alleging racial discrimination and filing under the Civil Rights Act of 1866? a. a four-year statute of limitations b. unlimited compensatory and punitive damages c. assistance in filing from the Equal Employment Opportunity Commission d. applicability to all employees, not just those with 15 or more employees
C. assistance in filing from the Equal Employment Opportunity Commission
A manager used her position in the company to develop a new business the company might have pursued on its own. This is a breach of the a. duty of care. b. duty of non-competition. c. duty of loyalty. d. duty of recognition.
C. duty of loyalty
Which of the following is the most appropriate term to use when describing management's duty to its shareholders? a. official duty b. legal duty c. fiduciary duty d. statutory duty
C. fiduciary duty
For the business judgment rule to apply, the manager must a. be trying to resolve a conflict of interest. b. have exercised extraordinary care in resolving the situation. c. have acted in the best interests of the corporation. d. prove he or she was aware of the decision being made.
C. have acted in the best interests of the corporation
Under which circumstances would the EEOC consider obesity to be a disability? a. only if it has an underlying physiological cause b. only if the individual is morbidly obese c. if it has an underlying physiological cause and/or if the individual is morbidly obese d. being overweight is not considered a disability under any circumstances
C. if it has an underlying physiological cause and/or if the individual is morbidly obese
Which of the following would be a reasonable accommodation under the ADA? a. modifying a job description and job duties to accommodate the disabled worker b. assigning a shadow employee to work with the disabled worker c. providing part-time schedules to accommodate the disabled worker d. creating a new job that the disabled worker can perform
C. providing part-time schedules to accommodate the disabled worker
An employer may be liable for an employee's sexual harassment if a. the supervisor scheduled the plaintiff and defendant to work together. b. the defendant showed signs of being distraught over the harassment. c. the plaintiff suffered a "tangible employment action" such as firing or demotion. d. All of these are correct.
C. the plaintiff suffered a "tangible employment action" such as firing or demotion
Wizardry Corporation's purpose clause in its charter states the following: "To operate a home-cleaning service business." After a few years of successful operation, Wizardry is offered the challenge of landscaping a neighboring business. If Wizardry accepts the offer, it would be violating its charter under a. the de jure doctrine. b. the de facto doctrine. c. the ultra vires doctrine. d. an estoppel theory
C. the ultra vires doctrine
Which of the following is a fundamental goal of shareholders? a. to have the business survive b. to keep their jobs c. to have an immediate increase in stock price d. to have the business provide jobs
C. to have an immediate increase in stock price
What is an inside director? a. a shareholder charged with the illegal act of insider trading b. a member of the board of directors who is also a board member of a competing firm c. a shareholder who is a board member of a competing firm d. a member of the board of directors who is also an employee of the corporation
D. A member of the board of directors who is also an employee of the corporation
Hank owns 100 shares of cumulative preferred stock in Wayside Transport, Inc. Kelsey owns 50 non-cumulative preferred shares, and Oleg owns 120 shares of common stock. Wayside does not pay dividends in 2015. In 2019, a. Hank and Kelsey must receive their 2019 dividends before Oleg is paid any 2019 dividends. b. Oleg cannot receive any 2019 dividends until Hank is paid for the 2015 dividends. c. Kelsey cannot receive the dividends Wayside could not afford to pay in 2015. She will just lose them. d. All of these are correct.
D. All of these are correct
In some states, an employer can discipline or fire employees for a. smoking cigarettes, even in the privacy of their own home. b. posting an unflattering comment about the employer on social media. c. dating coworkers, even if the relationship is consensual. d. All of these are correct.
D. All of these are correct
Mariposa is a shareholder of Tuscan Corporation. If she is acting in good faith, under the Model Act she has the right to a. inspect the company's accounting records. b. vote on a merger proposal. c. examine the company's minute book. d. All of these are correct.
D. All of these are correct
Which of the following are remedies available to a successful plaintiff under Title VII? a. hiring, reinstatement, and back pay b. hiring, reinstatement, and back pay c. compensatory and punitive damages d. All of these are correct.
D. All of these are correct
An employer would be expected to make reasonable accommodations for a disabled worker, such as a. creating a new job that the worker can do. b. adapting the work environment for all employees so the disabled worker doesn't feel segregated or stigmatized. c. providing transportation to and from the worker's home. d. allowing a part-time schedule.
D. Allowing a part time schedule
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 reject Meredith's demand or simply fail to respond. c. can appoint a Special Litigation Committee. d. can do any of these options
D. Can do any of these options
Which state does your textbook cite as being particularly attractive to companies looking to incorporate? a. Ohio b. Alaska c. Utah d. Delaware
D. Delaware
Which of the following statements regarding social enterprises is TRUE? a. Social enterprises are essentially nonprofit organizations. b. To become a socially conscious organization, one-half of the shareholders must approve. c. The focus of social enterprises is the motto "reduce, reuse, recycle." d. Unlike charities, social enterprises can sell stock to investors.
D. Unlike charities, social enterprises can sell stock to investors
Mega Corp. hired permanent replacement workers when its union went out on strike seeking better medical and retirement benefits. After the strike is over, Mega Corp. a. must give the striking employees their jobs back since this was an economic strike. b. must give the striking employees their jobs back since this was an unfair labor practices strike. c. may hire additional workers without considering the striking employees who want their jobs back. d. does not have to give the striking employees their jobs back since this was an economic strike
D. Does not have to give the striking employees their jobs back since this was an economic strike
Which of the following forms of organization is a compromise between starting one's own business as an entrepreneur and working for someone else as an employee? a. limited liability company b. sole proprietorship c. close corporation d. franchise
D. Franchise
Jim was a mechanic. One day when he attempted to weld a car's gasoline tank, it exploded and he was hurt. He filed to collect workers' compensation. His employer resisted on grounds that Jim had been negligent and had also violated the express regulations of the company when he attempted to weld a gasoline tank. Which statement is correct? a. Jim cannot recover if it is shown that his negligent conduct caused the explosion. b. Jim cannot recover if it is shown that he violated the express regulations of his employer. c. Workers' compensation doesn't apply in situations like this. d. Jim can recover even if he was negligent and violated the employer's rules
D. Jim can recover even if he was negligent and violated the employer's rules
Maureen, a shareholder of Metra, Inc., is unhappy with how the corporation is being managed. Maureen wants the company to sell off its unproductive divisions. Which statement is correct? a. If Maureen owns at least 1 percent or $2,000 of Metra's stock, she can require the company to include her proposal in its proxy statement. b. If Maureen has a proper purpose, she can require the company to include her proposal in its proxy statement. c. If Maureen can show cause, she can require the company to automatically sell off its unproductive divisions. d. Maureen cannot require that the company put her proposal to sell off unproductive divisions on its proxy statement.
D. Maureen cannot require that the company put her proposal to sell off unproductive divisions on its proxy statement
Employees of Mega Corp. have gone out on strike seeking better pay. Mega Corp. announces that if the union does not end the strike, it will begin hiring replacement workers. Which statement is correct? a. Hiring replacement workers during a strike is an unfair labor practice. b. Mega Corp can only hire replacement workers if the collective bargaining agreement expressly gives the company the right to do so. c. Mega Corp can only hire replacement workers if it gives the union 14 days' notice prior to actually bringing in the replacement employees. d. Mega Corp can hire replacement workers at any time during a strike.
D. Mega Corp can hire replacement workers at any time during a strike
Zoe, who works as a retail clerk, wishes to talk with her coworkers about organizing a union. Her employer forbids her from talking with other workers about union activity in the presence of customers and threatens to fire her if she joins the union. Does the employer have a legal right to make this threat to Zoe? a. Yes, the employer may prohibit its employees from discussions about union organizing. b. Yes, but only if expressly authorized by state law. c. No, an employee has the right of free speech at any time. d. No. An employer may limit the time and place of conversation, but may not threaten to fire the employee.
D. No. An employer may limit the time and place of conversation, but may not threaten to fire the employee
Megan was employed by a large company. Her supervisor told her to falsify government reports. She refused and was fired. She sued for wrongful discharge. Her employer claimed that, since Megan was an at-will employee, she had no legal right to claim the company was liable for damages. Is the employer right? a. Yes. An at-will employee does not have a legal right to claim wrongful discharge of employment. b. Yes. As an employee, Megan owes a duty of loyalty to her employer. If the company was found to have acted illegally by falsifying the reports, it (not Megan) would be liable. c. No. Even though Megan was an at-will employee, such employees may not be fired without just cause. d. No. Though at-will employees do not have extensive rights relative to job security, they may not be legally fired for refusing to perform an illegal act.
D. No. Thought at-will employees do not have extensive rights relative to job security, they may not be legally fired for refusing to perform an illegal act
Which of the following statements regarding workplace bullying is accurate? a. Bullying in the workplace does not subject employers to any real liability claims. b. The Supreme Court in Indiana ruled that "workplace bullying" cannot be considered a form of intentional infliction of emotional distress. c. Studies show that workplace bullying is not a serious issue; only 10 percent of employees have admitted to being bullied at work. d. Not a single state has been able to pass anti-bullying legislation
D. Not a single state has been able to pass anti-bullying legislation
The proceeds, if any, of a derivative lawsuit go to a. the shareholders of the corporation. b. the shareholders who actually filed the lawsuit. c. the board of directors. d. the corporation.
D. The corporation
Who elects the officers of a corporation? a. the agents b. the shareholders c. the incorporators d. the directors
D. The directors
A union declares its workers are going on strike. The employer states the collective bargaining agreement is still in force for another eight months and that it contains a no-strike clause. The union claims the CBA's no-strike provision is not binding since new union leadership is in place. Which of the following statements is correct? a. The union can strike since new leadership is now in control. b. The union can strike since no-strike provisions have been ruled by the courts to be unenforceable. c. The union can strike since no-strike provisions have been ruled by the courts to be unenforceable. d. The union cannot strike because of the no-strike clause in the contract.
D. The union cannot strike because of the no-strike clause in the contract
The business judgment rule accomplishes all of the following EXCEPT a. permits directors to do their jobs. b. keeps judges out of corporate management. c. encourages directors to serve. d. totally protects managers from all liability.
D. Totally protects managers from all liability
A company's collective bargaining agreement has expired and negotiations are underway for a new one. After one exhausting session, union leaders have decided management will not bargain in good faith. The union declares it will be going out on strike the following midnight if an agreement is not reached. The union a. is allowed to go out on strike the following midnight. b. must give the employer at least seven days' notice before going out on strike. c. must give the employer at least 30 days' notice before going out on strike. d. must give the employer at least 60 days' notice before going out on strike.
D. must give the employer at least 60 days' notice before going out on strike
What constitutes a social enterprise's "triple bottom line"? a. employees, customers, and profits b. assets, liabilities, and revenue c. social concerns, shareholders, and sales d. people, planet, and profits
D. people, planet, and profits
At least once every three years, companies must take a nonbinding shareholder vote on the compensation of the five highest-paid executives. This is referred to as a. clawback pay action. b. voting out the directors. c. activist investing. d. say-on-pay.
D. say-on-pay
Which federal law protects Americans from being treated unfairly because of differences in their DNA that may affect their health? a. Title VII of the Civil Rights Act b. the Pregnancy Discrimination Act c. the Americans with Disabilities Act d. the Genetic Information Nondiscrimination Act
D. the Genetic Information Nondiscrimination Act
Luella just purchased five 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. set executive compensation. c. require that a proposal be placed in the company's proxy statement to be voted on at the shareholder meeting. d. vote to elect directors.
D. vote to elect directors
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 because the contract was signed in its name. b. yStar becomes liable on the contract as soon as it is incorporated. c. yStar is liable on the contract if the contractor knows that the corporation does not yet exist. d. yStar will be liable on the contract only if the corporation adopts the contract.
D. yStar will be liable on the contract only if the corporation adopts the contract
Which of the following laws provides support to unemployed workers? a. FUTA b. OSHA c. FLSA d. NLRA
FUTA
A business corporation can be incorporated under either state law or federal law
False
A corporation is required to have at least one director, no matter how many shareholders it has.
False
A corporation must have a registered agent within the state of incorporation only if the corporation maintains an office
False
A corporation officially states its purpose is "to engage in any lawful activity for which corporations may be organized under the General Corporation Law of Idaho." Under corporate law, this purpose is too broad. A corporation's purpose must be more narrowly defined.
False
A derivative lawsuit is filed by a shareholder of the corporation if their own rights have been harmed.
False
A finding by a court that a manager's decision had a rational business purpose does not necessarily protect the manager from a finding that he breached a duty of care
False
A partnership is a taxable entity, separate from the partners
False
A proxy is a vote that is mailed in, like an absentee ballot.
False
Alan, a dentist, and his wife Martha, an attorney, can protect their personal assets with limited liability from their business dealings by creating and operating a professional corporation together.
False
Alice works for a large advertising agency where she is hoping to be promoted to a management position. Alice's mother and two sisters all died of breast cancer at a young age. Alice's employer knows this and will not put Alice in a management position because he fears that she will also develop cancer. This decision is allowed because it is in the best interest of the company.
False
As a general rule, employers have a legal obligation to disclose information about former employees to potential future employers.
False
As part of the hiring process, it is legal for employers to use any personal information potential employees post on social media.
False
Brian is a police officer. He just turned 54 years old and is worried that he will be forced to retire next year when he turns 55. The Age Discrimination in Employment Act will protect him if his employer tries to force him to retire early.
False
Controlling shareholders have no fiduciary responsibility to minority shareholders.
False
Corporations have a distinct advantage over other forms of business organization in the area of taxation.
False
Courts are sympathetic to managers acting in the best interests of the corporation, even when the acts are illegal.
False
Employers may consider arrest records because that is not evidence of wrongdoing.
False
For those wishing to purchase a franchise, the Federal Trade Commission acts as a guardian, ensuring that the business idea is sound and that the information in the Franchise Disclosure Document is accurate.
False
Franchise fees can be costly, but they are usually payable over a number of years, after profits are generated from the business.
False
Heather applied for a promotion, but her manager promoted a coworker because the manager knew Heather was seven months pregnant. The manager did not want to promote someone who would probably be taking time off of work for childbirth and childcare. The manager has acted legally and reasonably to protect her company's interests.
False
If a public company decides not to solicit proxies for a shareholder meeting, it need not give shareholders the information that would have been required in a proxy statement.
False
If employees wish to organize a union, the employer is prohibited from distributing written notices to employees stating it is opposed to union activity within the company.
False
In order to be considered sexual harassment, the questionable behavior must be directed at a coworker of the opposite gender.
False
Incorporators are required to sign the charter, deliver it to the proper state officials, and purchase a certain percentage of the initial stock offering
False
Limited liability is a major advantage of a partnership as compared to a corporation.
False
Matt, a shareholder, can run for director by simply placing his name on the company's proxy statement.
False
Minority shareholders have no right to overturn an ordinary business transaction between the corporation and a controlling shareholder
False
Overall, directors get paid very little for the amount of work they perform
False
A director violates the corporate opportunity doctrine if he or she competes with the corporation, unless the disinterested directors and shareholders approve of the director's actions.
True
A fundamental problem of the modern corporation is the conflict of interests between managers, shareholders, and stakeholders.
True
A corporation is required to have at least one class of stock with voting rights.
True
Veritas, Inc. is planning its annual shareholder meeting on June 15. The company a. 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. b. must send notices to everyone who owns stock as of January 1. c. must send notices to everyone who owns stock on the "record date," which can be no more than 70 days before the meeting. d. is not required to have an annual shareholders meeting if the company is listed only on the NYSE
c. Must send notices to everyone who owns stock on the "record date," which can be no more than 70 days before the meeting
Prior to the Industrial Revolution, the primary English law of employment was that, in the absence of a contract, a worker was hired for a year at a time.
true
Under the Equal Pay Act of 1963, an employee may not be paid at a lesser rate than employees of the opposite sex for tasks requiring equal skill, effort, and responsibility under similar working conditions.
true
