Question 1

Quorum requirements vary among jurisdictions.

Accepted Answer

A) True 
 B)False

Question 2

Initiating and negotiating the sale and lease of corporate assets outside the regular course of business is a responsibility of the corporation's

Accepted Answer

A)   board of directors.
B)   high-level managers.
C)   chief executive officer.
D)   shareholders.E) A) and B)
F) All of the above

Question 3

As a director of InstaTalk Inc., Jim has a right of inspection. This right can be restricted by

Accepted Answer

A)   the corporate articles.
B)   the bylaws.
C)   an act of the board.
D)   none of the choices.E) B) and C)
F) A) and D)

Question 4

Every corporation is governed by a committee of managerial employees.

Accepted Answer

A) True 
 B)False

Question 5

Guy is a director of Healthcare Corporation. Guy attempts to use his best judgment in guiding corporate management but makes a few honest mistakes. He may be protected from liability for these mistakes by

Accepted Answer

A)   business success insurance.
B)   the business judgment rule.
C)   the duty of loyalty.
D)   none of the choices.E) None of the above
F) All of the above

Question 6

The initial board of directors of a corporation is normally appointed by the incorporators when the corporation is created.

Accepted Answer

A) True 
 B)False

Question 7

A corporate officer

Accepted Answer

A)   authorizes major corporate policy decisions.
B)   manages day-to-day operations of the corporation.
C)   all of the choices.
D)   makes and announces corporate financial decisions.E) A) and B)
F) A) and C)

Question 8

Because of their positions within the corporation, directors cannot be held liable for the crimes of corporate employees.

Accepted Answer

A) True 
 B)False

Question 9

Kathy is a director of Line Production Inc. As a director, with respect to the corporation, Kathy is expected to subordinate

Accepted Answer

A)   her personal interests to the corporation's welfare.
B)   the corporation's welfare to her personal interests.
C)   her knowledge and training in the corporation's interest.
D)   her business judgment in the shareholders' interests.E) A) and C)
F) B) and C) A

Question 10

The audit committee of a publicly held corporation is responsible for

Accepted Answer

A)   the selection, compensation, and oversight of accountants who audit the firm's financial records.
B)   interim business decisions between board meetings.
C)   dividends, amendments to the bylaws, and the issuance of stock.
D)   none of the choices.E) A) and D)
F) B) and C)

Question 11

Daisy is a director of Excavation Corporation. She opposes an offer to merge Excavation with Fill Inc. because she would lose her board position. Daisy is most likely liable for breach of

Accepted Answer

A)   the duty of care.
B)   the business judgment rule.
C)   the duty of loyalty.
D)   none of the choices.E) None of the above
F) A) and B) C

Question 12

A shareholder's right to transfer his or her shares to another party can be subject to restrictions set out in the bylaws or a shareholder agreement.

Accepted Answer

A) True 
 B)False

Question 13

A corporate director may not

Accepted Answer

A)   act in accord with his or her own knowledge and training.
B)   use prudent business judgment in the conduct of corporate affairs.
C)   delegate work to corporate officers.
D)   engage in self-dealing.E) None of the above
F) B) and D)

Question 14

Carmen and Diego are shareholders of Espresso Inc. Carmen's written authorization to Diego to vote her shares at a shareholders' meeting is

Accepted Answer

A)   a corporate resolution.
B)   a cumulative vote.
C)   a proxy.
D)   a quorum requirement.E) B) and C)
F) A) and D)

Question 15

When directors vote on issues affecting the corporation, ordinary matters generally require a greater-than-majority vote.

Accepted Answer

A) True 
 B)False  False

Question 16

Most states provide that the minimum number of directors that must be present before the board may transact business is

Accepted Answer

A)   all of the directors authorized in the articles or bylaws.
B)   a majority of the number authorized in the articles or bylaws.
C)   any odd number.
D)   one.E) C) and D)
F) B) and C)

Question 17

Roy is a director of Sales Inc. Sales enters into a contract with TeleCenter Corporation in which Roy has a personal interest. Roy must

Accepted Answer

A)   apply the "don't ask, don't tell" rule of personal conduct.
B)   use the situation to his personal advantage.
C)   make a full disclosure of the conflict of interest.
D)   none of the choices.E) A) and D)
F) A) and C)

Question 18

To participate in a shareholders' meeting, a shareholder must present a proxy.

Accepted Answer

A) True 
 B)False

Question 19

Shareholders, not directors, make major corporate policy decisions.

Accepted Answer

A) True 
 B)False

Question 20

Sara and Tim form Urban Foods Inc. When it comes to managing Urban, the firm relies on

Accepted Answer

A)   the board of directors.
B)   the business judgment rule.
C)   the officers.
D)   the chief executive officer.E) All of the above
F) A) and B)

Exam 34: Corporate Directors, Officers, and Shareholders

Quorum requirements vary among jurisdictions.

Correct AnswerverifiedShow Answer

Initiating and negotiating the sale and lease of corporate assets outside the regular course of business is a responsibility of the corporation's

Correct AnswerverifiedShow Answer

As a director of InstaTalk Inc., Jim has a right of inspection. This right can be restricted by

Correct AnswerverifiedShow Answer

Every corporation is governed by a committee of managerial employees.

Correct AnswerverifiedShow Answer

Guy is a director of Healthcare Corporation. Guy attempts to use his best judgment in guiding corporate management but makes a few honest mistakes. He may be protected from liability for these mistakes by

Correct AnswerverifiedShow Answer

The initial board of directors of a corporation is normally appointed by the incorporators when the corporation is created.

Correct AnswerverifiedShow Answer

A corporate officer

Correct AnswerverifiedShow Answer

Because of their positions within the corporation, directors cannot be held liable for the crimes of corporate employees.

Correct AnswerverifiedShow Answer

Kathy is a director of Line Production Inc. As a director, with respect to the corporation, Kathy is expected to subordinate

Correct AnswerverifiedA

The audit committee of a publicly held corporation is responsible for

Correct AnswerverifiedShow Answer

Daisy is a director of Excavation Corporation. She opposes an offer to merge Excavation with Fill Inc. because she would lose her board position. Daisy is most likely liable for breach of

Correct AnswerverifiedC

A shareholder's right to transfer his or her shares to another party can be subject to restrictions set out in the bylaws or a shareholder agreement.

Correct AnswerverifiedShow Answer

A corporate director may not

Correct AnswerverifiedShow Answer

Carmen and Diego are shareholders of Espresso Inc. Carmen's written authorization to Diego to vote her shares at a shareholders' meeting is

Correct AnswerverifiedShow Answer

When directors vote on issues affecting the corporation, ordinary matters generally require a greater-than-majority vote.

Correct AnswerverifiedFalse

Most states provide that the minimum number of directors that must be present before the board may transact business is

Correct AnswerverifiedShow Answer

Roy is a director of Sales Inc. Sales enters into a contract with TeleCenter Corporation in which Roy has a personal interest. Roy must

Correct AnswerverifiedShow Answer

To participate in a shareholders' meeting, a shareholder must present a proxy.

Correct AnswerverifiedShow Answer

Shareholders, not directors, make major corporate policy decisions.

Correct AnswerverifiedShow Answer

Sara and Tim form Urban Foods Inc. When it comes to managing Urban, the firm relies on

Correct AnswerverifiedShow Answer

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A

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C

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False

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