BUSI 4350 - Chap 9
Which of the following is the principal defense put forth by the defendant, other than the issuer, against a Section 11 claim of a false or misleading registration statement? Multiple choice question. Contributory negligence Due diligence Strict liability Assumption of the risk
Due diligence
Who among the following are identified as insiders of an organization? (Check all that apply.) Multiple select question. Customers Employees Directors Officers Shareholders
Employees Directors Officers
Which of the following exist(s) for the full life of the corporation even if its stockholders hold it only for a shorter period of time? Multiple choice question. Residual claims Equity capital Priority claims Debt capital
Equity capital
Which of the following issued the Markets in Financial Instruments Directive (MiFID) in 2007? Multiple choice question. The United States Russia Europe Asia
Europe
Identify a true statement about the rules of taxation for partnerships. Multiple choice question. Partnerships are subject to double taxation in states where the Revised Uniform Partnership Act has been adopted. Every partner's allocable share of income is subject to self-employment tax. Partners are exempted from paying tax on their share of partnership income if it has not been distributed to them. Fringe benefits provided to partners are tax-deductible.
Every partner's allocable share of income is subject to self-employment tax.
State legislation establishing limited liability limited partnerships (LLLPs) is generally directed at doing which of the following? Multiple choice question. Facilitating the acquisition of limited liability for the general partners of preexisting limited partnerships Facilitating the acquisition of unlimited liability for the general partners of preexisting general partnerships Facilitating the acquisition of unlimited liability for the general partners of preexisting limited partnerships Facilitating the acquisition of limited liability for the limited partners of preexisting limited partnerships
Facilitating the acquisition of limited liability for the general partners of preexisting limited partnerships
Partners owe each the duties of loyalty, due care, confidentiality, and sharing information. These are known as what type of duties? Multiple choice question. Fiduciary Equitable Third party beneficiary Incidental beneficiary
Fiduciary
Which of the following is correct regarding common stock? Multiple choice question. Common stock requires that dividends be paid in cash or cash equivalents (for example, bitcoin). Common stock is associated with "preferences" related to distributions. Common stock provides stockholders all three property rights in proportion to their holdings. Common stock was created largely for institutional investors to fill gaps on the risk-return spectrum.
Common stock provides stockholders all three property rights in proportion to their holdings.
The two types of capital available for financing business activities are which of the following? Multiple choice question. Debt and equity Debt and dividends Shares and stocks Dividends and shares
Debt and equity
Identify the process that forces defendants to give up ill-gotten gains by imposing civil penalties up to $750,000 for individuals and $15 million for corporations. Multiple choice question. Initial public offering Physical trading Disgorgement Takeover
Disgorgement
Identify the process that forces defendants to give up ill-gotten gains by imposing civil penalties up to $750,000 for individuals and $15 million for corporations. Multiple choice question. Takeover Physical trading Initial public offering Disgorgement
Disgorgement
In the United States, a corporation is taxed on its income and when the income (after tax deduction) is distributed to its shareholders, the shareholders are taxed again. This is known as which of the following? Multiple choice question. Risk mitigation Double jeopardy Double taxation Pass-through taxation
Double taxation
After the enactment of the Securities Act of 1933, the United States operated under which of the following types of regulatory environment for securities? Multiple choice question. Dual Joint and several Non-regulated Mutually exclusive
Dual
The directors and officers who act on behalf of a corporation share which of the following types of relationship with it? Multiple choice question. Non-statutory Independent contractor Fiduciary Personal
Fiduciary
Accredited investors
Financial directors and officers of the issuer and individuals with annual new income of at least $200,00 and/or net worth of at least $1 million
Which of the following is the only defense offered by Section 18 of the 1934 Act? Multiple choice question. Assumption of the risk Good faith Comparative negligence Contributory negligence
Good faith
The corporate cash that is used to buy a tender offeror's current stake is called which of the following? Multiple choice question. Greenmail A poison pill The crown jewel A secured transaction
Greenmail
A person associated with a corporation breaches his fiduciary duty to shareholders by buying a security while possessing material, nonpublic information about it. This is known as which of the following? Multiple choice question. Subrogation Arbitrage Insider trading Market capitalism
Insider trading
Blue sky laws are primarily applicable to which of the following types of securities offerings? Multiple choice question. Interstate International Private Intrastate
Intrastate
In a short-swing profits case, the insider's actual motive is which of the following? Multiple choice question. Negligence Proof by a preponderance of the evidence Proof beyond reasonable doubt Irrelevant
Irrelevant
If the issuing corporation and the offerees who buy securities are domiciled in different states, the sale of a new security through the public capital markets is governed by which of the following? Multiple choice question. State law The Restatement (Third) of the Law of Securities Federal law The Uniform Securities Code (USC)
Federal law
Generally, the law does not allow a partner to substitute a third party for itself without which of the following? Multiple choice question. The majority consent of the other partners The implied consent of the other partners The supermajority consent of the other partners The unanimous consent of the other partners
The unanimous consent of the other partners
Which of the following forces a shareholder to offer the stock to be sold to the corporation or the other shareholders before selling it to a third party? Multiple choice question. A bailment for the sole benefit of the selling shareholder A buy-sell agreement A right-of-first refusal agreement A mutual-benefit bailment
A buy-sell agreement
A corporation that has relatively few shareholders and the stock of which does not have a readily available market is called which of the following? Multiple choice question. A limited partnership A Subchapter S corporation A limited liability company A closely held corporation
A closely held corporation
Involuntary termination of a corporation is initiated by the actions of which of the following? Multiple choice question. The board of directors The shareholders The creditors A court
A court
Which of the following is a term in the lending contract that makes the debt essentially immediately payable should the condition specified cease to be satisfied? Multiple choice question. A corporate veil Preferred stock A debt covenant Common stock
A debt covenant
Identify the mandatory elements in the articles of incorporation of a corporation. (Check all that apply.) Multiple select question. The means by which the shareholders exert control over the board of directors The percentage of shareholders that must approve major corporate actions A description of the stock to be issued The corporation's name
A description of the stock to be issued The corporation's name
A person who acts on behalf of another person and is required to do so with great integrity is called which of the following? Multiple choice question. A financier A beneficiary A promoter A fiduciary
A fiduciary
Which of the following is the default form for a business with two or more owners that does not specifically act to create a separate entity? Multiple choice question. A limited liability company A proprietorship A partnership A C corporation
A partnership
A limited liability partnership (LLP) is created by filing which of the following with the state? Multiple choice question. Articles of organization Articles of incorporation A statement of dissolution A statement of qualification
A statement of qualification
Because the income statement seeks to measure economic income, it employs which of the following types of accounting? Multiple choice question. First in first out (FIFO) Cost Accrual Last in first out (LIFO)
Accrual
If a company has not previously sold equity securities to the public, the issuance is referred to as which of the following? Multiple choice question. An initial public offering A Howey offering A NASDAQ offering A novel public offering
An initial public offering
Traditional corporations are also known as which of the following? Multiple choice question. Professional corporations Nonprofit corporations S corporations C corporations
C corporations
Section 11 of the 1933 Act states that underwriters cannot be sued for false or misleading registration statements.
False
The owners of a corporation are responsible and liable for the corporation's legal obligations. True False
False
The partnership agreement formed under the Revised Uniform Partnership Act (RUPA) strictly forbids a partner from withdrawing from the partnership.
False
Arrange the steps involved in the creation of a corporation in the order of their occurrence, with the first step on top. Position 1 of 4 An organizational meeting is held to appoint the members of the board of directors. incorrect toggle button unavailable An organizational meeting is held to appoint the members of the board of directors. Position 2 of 4 The board meets to undertake the corporation's initial business, appoint officers, and adopt bylaws. incorrect toggle button unavailable The board meets to undertake the corporation's initial business, appoint officers, and adopt bylaws. Position 3 of 4 Stock issuance is authorized in exchange for contributions of capital, property, or services. incorrect toggle button unavailable Stock issuance is authorized in exchange for contributions of capital, property, or services. Position 4 of 4 An incorporator files articles of incorporation with the state government. incorrect toggle button unavailable An incorporator files articles of incorporation with the state government.
1. An incorporator files articles of incorporation with the state government. 2. An organizational meeting is held to appoint the members of the board of directors. 3. The board meets to undertake the corporation's initial business, appoint officers, and adopt bylaws. 4. Stock issuance is authorized in exchange for contributions of capital, property, or services.
Arrange the steps involved in the process of voluntary termination of a corporation in the correct order of occurrence. (Place the first step on top.) Instructions Choice 1 of 4. Distributing the corporation's assets to the shareholders toggle button Distributing the corporation's assets to the shareholders Choice 2 of 4. Distributing the assets to settle the claims of creditors toggle button Distributing the assets to settle the claims of creditors Choice 3 of 4. Voting by shareholders to authorize termination toggle button Voting by shareholders to authorize termination Choice 4 of 4. Filing articles of dissolution toggle button Filing articles of dissolution
1. Voting by shareholders to authorize termination 2. Distributing the assets to settle the claims of creditors 3. Distributing the corporation's assets to the shareholders 4. Filing articles of dissolution
Which of the following rarely hold any security more than a few hours, earning profits by exploiting minor price volatility, not inherent value? Multiple choice question. Angel investors Fiduciaries Day traders Brokers
Day traders
Sophisticated investors
Individuals with sufficient knowledge and experience in financial matters to able to evaluate the merits and risks of an investment
Senior executives are which of the following types of directors? Multiple choice question. Outside Incidental Third-party Inside
Inside
Identify a true statement about double taxation. Multiple choice question. It refers to the situation where a corporation has to pay both state and federal taxes. It is disadvantageous to closely held corporations as they are not permitted any tax-deductible fringe benefits. It constitutes the taxes levied on the corporation's income and on the dividends paid to the shareholders. It is legally exempt if a corporation's solvency is sufficient to pay dividends.
It constitutes the taxes levied on the corporation's income and on the dividends paid to the shareholders.
Which of the following is correct regarding taxation of partnership income? Multiple choice question. It is not taxed when the partnership income is not distributed to the partners. It is subject to double taxation, first at the partnership level, and second on the tax returns of the partners. It is taxed only only once, on the tax returns of the partners pursuant to the allocations specified in the partnership agreement. It is not taxed by the states.
It is taxed only only once, on the tax returns of the partners pursuant to the allocations specified in the partnership agreement.
Identify a true statement about a limited liability partnership (LLP). Multiple choice question. It is taxed like a limited liability company. It resembles a general partnership more closely than a limited liability company (LLC). Revised Uniform Partnership Act (RUPA) does not provide full limited liability to the LLP partners. A partner's limited liability does not extend to the negligence of other partners.
It resembles a general partnership more closely than a limited liability company (LLC).
The closest forms of business to a United States publicly traded corporation exist in all but which of the following countries? Multiple choice question. China Kenya Brazil Germany
Kenya
Which of the following is perhaps the most cherished characteristic of the corporate form? Multiple choice question. Premises liability Unlimited liability Limited liability Single taxation
Limited liability
Which of the following is a hybrid form of business entity that is created by combining certain desired characteristics of corporations and general partnerships? Multiple choice question. Sole proprietorship Limited liability company Cooperative Benefit corporation
Limited liability company
A common reason for the state to terminate a corporation is the failure to do which of the following? Multiple choice question. Monopolize the applicable market Make required annual filings Create shareholder value File the articles of incorporation
Make required annual filings
Identify the characteristics of a limited liability company (LLC). (Check all that apply.) Multiple select question. Annual meetings are mandatory according to the statutes. The management structure is rigid and inflexible. Minor annual filings and fees are generally required. The operating agreement is most likely to be in writing. As to limited liability and the duration of existence, it closely resembles a corporation.
Minor annual filings and fees are generally required. The operating agreement is most likely to be in writing. As to limited liability and the duration of existence, it closely resembles a corporation
Which of the following is incorrect regarding the capital structure of partnerships? Multiple choice question. Debt capital can be raised by offering partnership assets to lenders as collateral. Debt capital can be raised based on the creditworthiness of the individual partners. The sole source of equity is the partners themselves. New partners can be added to the partnership, but they cannot be permitted to infuse additional equity capital.
New partners can be added to the partnership, but they cannot be permitted to infuse additional equity capital.
By default, management in a general partnership is which of the following? Multiple choice question. Outsourced Employee-focused Not centralized Centralized
Not centralized
Large corporations sell units of their debt to the public to do which of the following? Multiple choice question. Obtain long-term debt capital Decrease their number of shareholders Liquidate their businesses Acquire short-term loans
Obtain long-term debt capital
In a corporation, the board of directors exercises all the corporate powers on behalf of which of the following? Multiple choice question. Shareholders Employees Creditors Suppliers
Shareholders
Identify the characteristic features of a corporation. (Check all that apply.) Multiple select question. Shareholders receive stock for their capital contribution. Ownership is separated from the management. The board of directors operates the corporation on a day-to-day basis. Corporate powers are exercised by the board of directors on behalf of the shareholders. A single proprietor owns and operates the corporation.
Shareholders receive stock for their capital contribution. Ownership is separated from the management. Corporate powers are exercised by the board of directors on behalf of the shareholders.
Identify the default forms of traditional business entities. (More than one option may be correct.) Multiple select question. Limited liability companies Sole proprietorships Corporations Partnerships
Sole proprietorships Partnerships
Under the Uniform Limited Partnership Act, a limited liability limited partnership (LLLP) is created by doing which of the following? Multiple choice question. Filing articles of incorporation with the secretary of state Stating that the limited partnership is an LLP in a petition for writ of certiorari filed with the federal district court Stating that the limited partnership is an LLLP in the certificate of limited partnership Filing articles of organization with the secretary of state
Stating that the limited partnership is an LLLP in the certificate of limited partnership
Which of the following are hybrid forms of business entities that function as any other corporation under state corporate law, but whose tax consequences flow through to the tax returns of the shareholders for income tax purposes? Multiple choice question. Subchapter S corporations Limited liability companies Sole proprietorships Cooperatives
Subchapter S corporations
Which of the following is correct when a partnership interest is assigned to a third party? Multiple choice question. The assignee holds the status of the assigning partner. The assignee may fully substitute the assigning partner without the consent of the other partners. The assignee has the right to participate in management control. The assignee is entitled to the distribution rights of the assigning partner.
The assignee is entitled to the distribution rights of the assigning partner.
Which of the following posits a powerful presumption that a decision made by a loyal and informed board will not be overturned unless it cannot be attributed to any rational business purpose? Multiple choice question. The commercial impracticability doctrine The substantial performance doctrine The business judgment rule The Statute of Frauds
The business judgment rule
Which of the following protects officers and directors and the decisions they make? Multiple choice question. The Statute of Frauds The business judgment rule The parol evidence rule The substantial performance doctrine
The business judgment rule
Which of the following is not a senior-level position in a corporation? Multiple choice question. The chief executive officer (CEO) The chief operating officer (COO) The chief financial officer (CFO) The chief partnership officer (CPO)
The chief partnership officer (CPO)
Identify the purposes of the Securities and Exchange Act of 1934. (Check all that apply.) Multiple select question. To ensure full disclosure of all material information to help investors make informed decisions To prevent fraudulent conduct in the markets To prevent trades from occurring electronically over a computer network To ensure that intrastate offerings are governed by federal law
To ensure full disclosure of all material information to help investors make informed decisions To prevent fraudulent conduct in the markets
Governance issues arise when the chief executive officer of a corporation exercises immense control on information that reaches the board. True false question.TrueFalse
True
If persons create a business together without taking any steps to establish a different form, they will automatically create a general partnership. True false question. True False
True
Identify the features of a partnership. (Check all that apply.) Multiple select question. Two or more persons carry on a business as co-owners. Every partner is an agent of the partnership. It sells stocks to the general public. The owners' equity interest is called stock. The owners' equity interest is called a partnership interest.
Two or more persons carry on a business as co-owners. Every partner is an agent of the partnership. The owners' equity interest is called a partnership interest.
The publicly held corporation and the closely held corporation are which of the following? Multiple choice question. Alternate names for the limited liability company Alternate names for the limited partnership Two synonymous corporate realities Two very different corporate realities
Two very different corporate realities
Data from the Securities and Exchange Commission (SEC) regarding 2017 offerings indicates that how much capital was raised privately in the United States? Multiple choice question. $1 trillion 3 trillion $1.5 trillion $2.5 trillion
3 trillion
The Securities and Exchange Commission (SEC) may impose a penalty of up to what percent of the profit gained or loss avoided by insider trading? Multiple choice question. 100 200 300 150
300
A short-swing profit case conclusively presumes that the insider had material inside information and unlawfully traded on it any time the insider engages in any purchase and sale, or sale and purchase, of an equity security of the insider's corporation if both transactions occur within which of the following time periods? Multiple choice question. 1 year 6 months 3 months 30 days
6 months
C corporations account for what percent of all business revenue? Multiple choice question. 63 percent 37 percent 51 percent 45 percent
63 percent
In civil damage cases regarding securities law violations, harmed plaintiffs typically join together in which of the following? Multiple choice question. A mutually exclusive action A joint and several action A class action lawsuit A bifurcated lawsuit
A class action lawsuit
As an alternative to a tender offer, a person can mount which of the following by nominating an alternative slate of directors and soliciting shareholders to vote out the current management? Multiple choice question. A proxy fight Broker voting Insider trading Private enforcement
A proxy fight
Powers of the Securities and Exchange Commission (SEC) to enforce securities fraud law included all but which of the following? Multiple choice question. The issuance of a cease-and-desist order An injunction against an offending party A request for liquidated damages A prohibition against a violator from serving as an officer or director of a publicly traded company in the future
A request for liquidated damages
The process of acquiring control of a corporation when mergers or acquisitions fail is known as which of the following? Multiple choice question. A tender offer A poison pill An initial public offering A private offer
A tender offer
In a centralized management structure, the board of directors of a corporation does which of the following? Multiple choice question. Meets annually to elect shareholders Recruits all the employees of the corporation Operates the business on a day-to-day basis Appoints the officers needed to operate the business
Appoints the officers needed to operate the business
Which of the following officially ends the corporation's existence? Multiple choice question. Articles of organization Chapter 11 bankruptcy Articles of incorporation Articles of dissolution
Articles of dissolution
To create a corporation, which of the following must be filed with the state? Multiple choice question. Articles of organization Articles of incorporation A petition for writ of certiorari A motion for declaratory judgment
Articles of incorporation
The process of creating a limited liability company (LLC) requires the owners to file which of the following with the state? Multiple choice question. Articles of organization A petition for writ of certiorari Article of incorporation Articles of dissolution
Articles of organization
Like corporations, which of the following are created by law and have a separate legal existence? Multiple choice question. Natural persons Judicial bodies Artificial persons Administrative agencies
Artificial persons
Arrange the management roles in decreasing order of authority. (Place the role with the most authority on top.) Instructions Choice 1 of 4. Chief executive officer toggle button Chief executive officer Choice 2 of 4. Board of directors toggle button Board of directors Choice 3 of 4. Middle-level management toggle button Middle-level management Choice 4 of 4. Rank-and-file employees toggle button Rank-and-file employees
Board of directors Chief executive officer Middle-level management Rank-and-file employees
Units of debt that are sold by large corporations to the public with an objective of raising their capital are known as which of the following? Multiple choice question. Bonds Fractional shares Revolving credit Dividends
Bonds
Since the 1990s, which of the following have made it more difficult for plaintiffs to successfully join together in a class action lawsuit for securities law violations? Multiple choice question. Neither actions taken by the United States Congress nor actions taken by the U.S. Supreme Court Actions taken by the U.S. Supreme Court only Actions taken by the United States Congress only Both actions taken by the United States Congress and actions taken by the U.S. Supreme Court
Both actions taken by the United States Congress and actions taken by the U.S. Supreme Court
The selection of a particular business form is often driven by which of the following? Multiple choice question. Market realities only The founders' preferences for certain business characteristics only Both the founders' preferences for certain business characteristics and market realities Neither the founders' preferences for certain business characteristics nor market realities
Both the founders' preferences for certain business characteristics and market realities
Federal securities laws impose which of the following restrictions on the transfer of a publicly traded corporation's stock? Multiple choice question. Narrow State-based Broad Market-based
Broad
Identify the intermediaries who provide advisory services to individuals who want to buy or sell securities listed in the stock exchange. Multiple choice question. Shareholders Brokers Traders Investors
Brokers
Which of the following are true of general partnerships? (Check all that apply.) Multiple select question. Partners share the risks and rewards from conducting a business. Individual partners are at substantial risk in a partnership relationship. Co-owners of a business property directly become partners in the business. Partnerships are formed only by written agreements.
Partners share the risks and rewards from conducting a business. Individual partners are at substantial risk in a partnership relationship.
Application of which of the following doctrines is likely to result in the loss of limited liability in closely held corporations? Multiple choice question. Piercing the corporate veil Product liability Res ipsa loquitur Respondeat superior
Piercing the corporate veil
Identify the principle classes of stock. (Check all that apply.) Multiple select question. Cumulative stock Preferred stock Liquidated stock Common stock
Preferred stock Common stock
Identify a true statement about preferred stockholders. Multiple choice question. Preferred stockholders lack the right to participate in the control of the corporation. All corporate growth inures to the preferred stockholders over the common stockholders. During liquidation, preferred stockholders are paid before the claims of creditors are satisfied. Preferred stock is rarely cumulative to help ensure that its owners regularly receive dividends.
Preferred stockholders lack the right to participate in the control of the corporation.
Corporations are not allowed to solicit or sell their securities in the market during which of the following periods of the process of registering for an initial public offering (IPO)? Multiple choice question. Twilight Sunset Waiting Prefiling
Prefiling
In a closely held corporation, which of the following is correct? Multiple choice question. The liability of shareholders is limited to the loss of their investment in the corporation Principal shareholders are required to guarantee the corporation's debts Lenders are not aware of the limited liability feature Limited liability does not exist for tort claims
Principal shareholders are required to guarantee the corporation's debts
Equity holders' claims are referred to as which of the following types of claims? Multiple choice question. Residual Reversionary Priority Primary
Residual
Which of the following is correct regarding MiFID II? Multiple choice question. Although it has been drafted as a substantial revision of MiFID, its provisions have not yet gone into effect. The United Nations (UN) regulates it. The World Trade Organization (WTO) regulates it. Reviews of it are mixed.
Reviews of it are mixed.
Under which provision of the 1933 Act is it illegal, in connection with the sale or purchase of any security, to employ any scheme or to engage in any practice that defrauds another person participating in the financial markets? Multiple choice question. Section 11 Section 17(a) Section 10(b) Rule 10b-5
Section 17(a)
Which Section of the 1934 Act addresses false or misleading statements in any filing required to maintain the registration of a security? Multiple choice question. Section 21 Section 7 Section 11 Section 18
Section 18
The _____ is the organization that administered the federal law governing initial securities offerings in 1933. Multiple choice question. Federal Aviation Administration Federal Energy Regulatory Commission Securities and Exchange Commission Food and Drug Administration
Securities and Exchange Commission
If an individual carefully plans and legally minimizes her tax payments,she is considered to be engaging in which of the following? Multiple choice question. Liquidation Dissolution Tax evasion Tax avoidance
Tax avoidance
The illegal strategy of committing fraud to minimize one's tax burden is called which of the following? Multiple choice question. Voluntary liquidation Tax evasion Involuntary liquidation Tax avoidance
Tax evasion
The Enron crisis enabled the United States Congress to enact which of the following to address corporate governance issues? Multiple choice question. The Sarbanes-Oxley Act (SOX) The Uniform Commercial Code (UCC) The Code of Federal Regulations (CFR) The Administrative Procedures Act (APA)
The Sarbanes-Oxley Act (SOX)
Which of the following is the federal law that governs the initial securities offerings of corporations? Multiple choice question. The Securities Exchange Act of 1934 The Uniform Securities Code (USC) The Securities Act of 1933 The Restatement (Third) of the Law of Securities
The Securities Act of 1933
Which of the following federal administrative agencies brings civil securities law enforcement actions? Multiple choice question. The Securities Law Enforcement Commission (SLEC) The Federal Trade Commission (FTC) The Uniform Commerce Commission (UCC) The Securities and Exchange Commission (SEC)
The Securities and Exchange Commission (SEC)
Which of the following federal organizations brings criminal securities law enforcement actions? Multiple choice question. The Securities and Exchange Commission (SEC) The Federal Trade Commission (FTC) The Securities Law Enforcement Commission (SLEC) The United States Justice Department (DOJ)
The United States Justice Department (DOJ)
Identify a true statement about the physical exchange of securities in the secondary securities markets. Multiple choice question. The trades are made on an over-the-counter market. They are not governed by the federal law. The securities cannot be sold repeatedly. The agents of buyers and sellers deal directly with each other.
The agents of buyers and sellers deal directly with each other.
Identify a true statement about general partners in a limited partnership. Multiple choice question. They receive limited liability in the entity. They have no legal benefits and burdens. They do not participate in control. They are the sole managers of the entity.
They are the sole managers of the entity.
Which of the following is correct when a corporation's debt/equity ratio is too high? Multiple choice question. The corporation may be exposed to severe risk. The corporation employs funds at a rate of return that exceeds the interest rate on the borrowed funds. The corporation is most likely to have the right balance between debt and equity. The corporation automatically forfeits opportunities for positive financial leverage.
The corporation may be exposed to severe risk.
Which of the following is the strategy adopted by corporations to sell off their most attractive assets in order to avoid takeovers? Multiple choice question. The poison pill defense The white knight defense The crown jewel defense The greenmail defense
The crown jewel defense
Pursuant to which of the following doctrines are the partnership and the partners liable for all torts committed by partnership employees and for the unintentional torts committed by partners so long as the commission occurs in furtherance of partnership business? Multiple choice question. The doctrine of contributory negligence The doctrine of comparative negligence The doctrine of assumption of the risk The doctrine of respondeat superior
The doctrine of respondeat superior
Which of the following holds an employer liable for the acts of its employees? Multiple choice question. The doctrine of res ipsa loquitur Strict liability theory Proximate cause theory The doctrine of respondeat superior
The doctrine of respondeat superior
An employee of a corporation commits a crime while conducting business operations. Who is likely to be held responsible for the legal consequences that follow? Multiple choice question. The corporation's stakeholders The employee and the corporation The employee only The board of directors and the shareholders
The employee and the corporation
According to the Revised Uniform Partnership Act (RUPA), a partnership is automatically dissolved upon the occurrence of which of the following? Multiple choice question. The bankruptcy of a partner holding more than 40 percent of the partnership interests The death of a partner holding more than 30 percent of the partnership interests The expulsion of a partner holding more than 20 percent of the partnership interests The express withdrawal of a partner holding more than 50 percent of the partnership interests
The express withdrawal of a partner holding more than 50 percent of the partnership interests
The disadvantages of which of the following forms of business are so severe that one is usually well-advised to avoid it? Multiple choice question. The limited liability company The limited liability partnership The general partnership The S corporation
The general partnership
In a centralized management structure, which of the following is correct? Multiple choice question. The shareholders recruit the officers of the corporation Officers elect people onto the corporation's board of directors The officers of the corporation hire other employees The board of directors of the corporation hires all the employees
The officers of the corporation hire other employees
What is the sole source of partnership equity? Multiple choice question. The partners themselves The partnership Financial institutions Angel investors
The partners themselves
When one partner pays the debts of the business, that partner is entitled to recoup an appropriate share from the other partners. This occurs through which of the following? Multiple choice question. The right of recoverability The right of contribution The right of liability The right of appropriation
The right of contribution
Identify the property rights associated with stock ownership. (Check all that apply.) Multiple select question. The right to control through voting The right to participate in management The right to participate in dividends The right to receive assets upon liquidation The right to participate in hiring officers
The right to control through voting The right to participate in dividends The right to receive assets upon liquidation
The period between filing the registration statement for an initial public offering (IPO) and obtaining an approval from the Securities and Exchange Commission (SEC) is referred to as which of the following? Multiple choice question. The waiting period The tombstone period The prefiling period The posteffective period
The waiting period
Which of the following is incorrect regarding business forms recognized internationally? Multiple choice question. Managers operating in a multinational environment should be able to evaluate the form-of-business decisions under a variety of regimes. They are essentially intended to achieve various combinations of the form-of-business characteristics recognized in the United States. Dozens of business forms exist throughout the world. There are no similarities between the forms of business recognized in the United States and the forms of business recognized internationally.
There are no similarities between the forms of business recognized in the United States and the forms of business recognized internationally.
Identify the rights enjoyed by preferred stockholders of a corporation. (Check all that apply.) Multiple select question. They enjoy the right to participate in the management of the corporation. They are entitled to receive arrearage before common shareholders get any dividends. They are paid annual dividends in full before any dividends are distributed to common stockholders. They can appoint officers by directly bypassing the board's control.
They are entitled to receive arrearage before common shareholders get any dividends. They are paid annual dividends in full before any dividends are distributed to common stockholders.
Identify the rights enjoyed by preferred stockholders of a corporation. (Check all that apply.) Multiple select question. They enjoy the right to participate in the management of the corporation. They are entitled to receive arrearage before common shareholders get any dividends. They can appoint officers by directly bypassing the board's control. They are paid annual dividends in full before any dividends are distributed to common stockholders.
They are entitled to receive arrearage before common shareholders get any dividends. They are paid annual dividends in full before any dividends are distributed to common stockholders.
Which of the following is correct regarding outside directors? Multiple choice question. They include chief operating officers (COOs). They include chief executive officers (CEOs). They include chief financial officers (CFOs). They are not employed by the company.
They are not employed by the company.
Which of the following is correct regarding the limited partners in a limited partnership? Multiple choice question. The have the same legal benefits and burdens as general partners They do not participate in control They are liable for debt over and above their contributions to partnership capital They are the sole managers of the entity
They do not participate in control
In the decade following the Bernard Madoff $50 billion fraud scandal, what happened to Securities and Exchange Commission (SEC) prosecutions for Ponzi schemes? Multiple choice question. They declined by 50 percent They increased by 25 percent They increased by 50 percent They declined by 25 percent
They increased by 50 percent
Identify a true statement about the role of shareholders in an organization. Multiple choice question. They exercise corporate power on behalf of the board of directors. They appoint several officers to manage the company. They meet annually to elect a board of directors. They operate the business on a day-to-day basis.
They meet annually to elect a board of directors.
Form 10-K
This includes audited financial statements.
Form 8-K
This is required whenever a material event occurs.
Form 10-Q
matches Choice This includes financial statements that are not audited.