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Questions
Q:
Delta, Inc., agrees to assume a debt of Excel Company to First State Bank. The agreement is not in writing. To be enforceable, the promise must be for the benefit of
a. any party.
b. Delta.
c. Excel.
d. First State.
Q:
Which of the following constitutes a breach of the duty of loyalty by a corporate officer?
A) straight voting
B) cumulative voting
C) piercing the corporate veil
D) self-dealing
Q:
Randy and Beach Biz Company enter into an oral contract under which Randy agrees to clean Beach Biz's office for two years. This contract is enÂforceable by
a. Randy only.
b. Beach Biz only.
c. either party.
d. neither party.
Q:
Which of the following is true of cumulative voting?
A) Each shareholder votes the number of shares he or she owns on candidates for each of the positions open for election.
B) A majority shareholder always elects the entire board of directors.
C) The cumulative voting method always applies to elections for the board of directors.
D) A minority shareholder has a better opportunity to elect someone to the board of directors.
Q:
Century Properties. Inc., and Broadview Capital Corporation enter into a conÂtract for a sale of land. To be enforceable, the contract must be in writing if the land is valued at
a. $50.
b. $500.
c. $5,000.
d. any price.
Q:
A duty that requires directors and officers to not act adversely to the interests of the corporation and to subordinate their personal interests to those of the corporation and its shareholders is known as ________.
A) the duty of care
B) the duty of loyalty
C) the duty of obedience
D) self-dealing
Q:
Which of the following policies helps keep a corporate officer from being sued for honest mistakes made on behalf of a corporation?
A) the duty of loyalty
B) the duty of obedience
C) the business judgment rule
D) self-dealing
Q:
ʺThe market demand curve for labor is the horizontal summation of the labor demand curves of all firms.ʺ Do you agree or disagree? Why?
Q:
Lara induces Moe to enter into a contract for the sale of an apartment about which Lara fraudulently misrepresents a number of material facts. Lara tells Moe that her commission is 6 percent, but their signed, written contract states "12 percent." The Statute of Frauds governs
a. contracts that are induced by fraud.
b. contracts that must be in writing to be enforceable.
c. the admissibility in court of oral evidence.
d. the merging of oral and written statements into one contract.
Q:
________ are employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation.
A) Corporate officers
B) Shareholders
C) Registered agents
D) Ombudsmen
Q:
Gary threatens physical harm to force Hugh to sell his business, Imported Goods, Inc., to Gary for a below-market price. This is
a. duress.
b. fraud.
c. puffery.
d. undue influence.
Q:
Steven, who is Bertha's guardian, convinces her to buy a certain parcel of land from Christy at a greatly inflated price. Steven may be liable for
a. duress.
b. fraud.
c. puffery.
d. undue influence.
Q:
A member of the board of directors who is also an officer of the corporation is known as a(n) ________.
A) inside director
B) ombudsman
C) registered agent
D) shareholder
Q:
Don, a salesperson for Excel Autos, promises Fern that a certain car will give her a "smooth ride." Don offers a test drive, which Fern deÂclines. She buys the car but soon realizes that its suspension is in poor condiÂtion. Fern
a. can rescind the contract on the ground of fraud.
b. can rescind the contract on the ground of misrepresentation.
c. can rescind the contract on the ground of mistake.
d. was not defrauded.
Q:
In which of the following cases can the alter ego doctrine be invoked in a corporate civil case?
A) when shareholders bring a lawsuit on behalf of the corporation after the corporation failed to do so itself
B) when unpaid creditors are trying to collect from shareholders a debt owed by the corporation
C) when there is mismanagement of corporate stocks by the board of directors
D) when shareholders are trying to collect for fraud committed by a third party
Q:
The Sherman Antitrust Act of 1890 prohibitedA) export tariffs. B) attempts to restrain trade.C) all existing monopolies. D) interstate commerce.
Q:
Which of the following is true about dividends?
A) Dividends are paid at the discretion of the shareholders.
B) Dividends cannot be used for corporate purposes.
C) Dividends will be paid to shareholders who have sold their shares prior to the record date.
D) Dividends in cash or property, once declared, cannot be revoked.
Q:
In selling software to Payroll Services Corporation, Ray tells Payroll's purchasÂing agent that the software is "almost human." This is
a. fraud.
b. duress.
c. puffery.
d. undue influence.
Q:
________ is a system in which each shareholder votes the number of shares he or she owns on candidates for each of the positions open.
A) Cumulative voting
B) Straight voting
C) Supramajority voting
D) Trust voting
Q:
Olin convinces Pia, who has no artistic ability, that Pia has considerable talent and induces Pia to pay Olin $10,000 for art lessons. When Pia realizes the truth, she files a suit against Olin. Pia is most likely to recover on the basis of
a. fraud.
b. mistake.
c. undue influence.
d. none of the choices.
Q:
Gina induces Hugh to enter into a contract for the purchase of a condominium about which Gina knowingly misrepresents a number of material features. When Hugh discovers the truth, he can
a. not rescind the contract.
b. rescind the contract on the basis of fraud.
c. rescind the contract on the basis of mistake.
d. rescind the contract on the basis of undue influence.
Q:
According to the Revised Model Business Corporation Act (RMBCA), what establishes a quorum to hold a meeting of the shareholders?
A) a majority of the outstanding shares
B) a majority of the unissued shares
C) a majority of the treasury shares
D) a majority of the liquidated shares
Q:
Ralph offers to sell Sophie, who is seventeen years of age, a car about which Ralph intentionally misrepresents several material facts. In reliance on the misrepresentations, Sophie buys the car. To prove fraud in this transaction, Sophie would have to show that
a. Ralph intentionally deceived Sophie.
b. Ralph made statements that were obviously exaggerated.
c. Sophie does not know anything about cars.
d. Sophie is under eighteen years of age.
Q:
The Merrick and Stanley Corporation has 28,000 outstanding shares. During a proposal for a merger, the shareholders decide to increase the quorum of the vote of shareholders to 75 percent, using the supramajority voting rule. How many minimum affirmative votes would be needed to pass the supramajority voting requirement?
A) 14,001
B) 21,280
C) 21,000
D) 28,000
Q:
Suppose Lisa owns 1,000 shares of a corporation. Assume that four directors are to be elected to the board. With ________ voting, Lisa can multiply the number of shares she owns (1,000) by the number of directors to be elected (four), and she can cast all the resulting votes (4,000) for one candidate or split them among candidates as she determines.
A) supramajority
B) noncumulative
C) cumulative
D) preemptive
Q:
The two basic types of government regulation areA) regulation of natural monopolies and regulation of cartels.B) economic regulation and industry regulation. C) social regulation and labor law.D) social regulation and economic regulation.
Q:
May is a stockbroker. Due to May's statements, Nora believes that the price of OK Goods, Inc. (OKGI), a widely traded stock, is going to inÂcrease subÂstantially. Nora buys 500 shares of OKGI at $10 per share, but the price soon drops to $2. Nora can successfully recover
a. nothing.
b. the amount of the purchase price.
c. the amount of the purchase price plus the expected increase.
d. the amount of the purchase price plus the unexpected decrease.
Q:
Bilkis Brans has 20,000 outstanding shares with four shareholders. Ester owns 9,000 shares, Mendez owns 4,000 shares, Judy owns 4,000 shares, and Aaron owns 3,000 shares. Suppose that two directors of the corporation are to be elected from a potential pool of five candidates. Ester favors candidates 1 and 5, Mendez favors candidates 2 and 4, Judy favors candidates 3 and 4, and Aaron favors candidates 2 and 3. If straight voting occurs, which of the two candidates are likely to win?
A) candidates 1 and 5
B) candidates 1 and 4
C) candidates 2 and 3
D) candidates 2 and 4
Q:
Hillside Homes, Inc., and Ideal Builders, Inc., enter into a construction contract that includes six pages of detailed calculations. Later Hillside, whose project manager compiled the figures, discovers that some numbers were multiplied incorrectly, but Ideal refuses to make changes. A court would most likely
a. allow the parties to rescind the contract.
b. award damages to Hillside for the mistakes.
c. award damages to Ideal for the mistakes.
d. enforce the contract without requiring changes.
Q:
The Inkilwas Corporation has 30,000 shares outstanding. A shareholders' meeting is duly called to amend the company's articles of incorporation, and 17,501 shares are represented at the meeting. If an amendment to the articles of incorporation is put to vote at this meeting, which of the following statements is true in terms of passage of the amendment?
A) The amendment will not pass, since all 30,000 outstanding shares must be represented at the meeting in order to vote to amend the articles of incorporation.
B) The amendment will pass if all 17,501 shares represented at the meeting vote to approve it.
C) The amendment will pass if 4,376 shares represented at the meeting vote to approve it.
D) The amendment will pass if 8,751 shares represented at the meeting vote to approve it.
Q:
Grover contracts to sell two tracts of land to Hank. Both parties believe that the two tracts are adjacent, but in fact they are not. Grover is still willing to sell the land, but under these circumstances the deal would adversely affect Hank.
Because of the parties' belief about the adjacency of the property, their contract is
a. unavoidable.
b. unconscionable.
c. unenforceable.
d. voidable.
Q:
The Inkilwas Corporation has 30,000 shares outstanding. A shareholders' meeting is duly called to amend the articles of incorporation, and 17,501 shares are represented at the meeting. According to the Revised Model Business Corporation Act (RMBCA), what is the minimum number of outstanding shares that must be represented in this case to have a quorum?
A) 12,001
B) 18,501
C) 15,001
D) 17,501
Q:
Grover contracts to sell two tracts of land to Hank. Both parties believe that the two tracts are adjacent, but in fact they are not. Grover is still willing to sell the land, but under these circumstances the deal would adversely affect Hank.
The parties' belief about the adjacency of the property is
a. a bilateral mistake.
b. a fraudulent misrepresentation.
c. a unilateral mistake.
d. unconscionable.
Q:
A written document in which a shareholder authorizes a person to vote the shareholder's shares at the shareholders' meetings in the event of the shareholder's absence is known as a ________.
A) quorum
B) notice of shareholder's meeting
C) certificate of authority
D) proxy
Q:
FirmAnnual SalesFirmAnnual SalesA$1000G$800B800H1500C220I1050D75J90E50K75F40L300Refer to the above table. The four -firm concentration ratio isA) 85.8 percent. B) 75 percent. C) 72.5 percent. D) 59.2 percent.
Q:
An integrated contract is a contract with more than one subject or part.
Q:
An integrated contract is the final embodiment of the terms of an agreement.
Q:
When is the annual shareholders' meeting held?
A) according to the date fixed in the bylaws
B) at the discretion of the board of directors
C) only if and when there is an organizational crisis
D) only when necessary to elect a new board of members
Q:
Oral evidence of the meaning of a contract with incomplete terms can be introduced at a trial.
Q:
Which of the following is true of shareholders?
A) They cannot enter into contracts that bind the corporation.
B) They cannot vote to elect the board of directors.
C) They cannot take active charge in deciding fundamental changes in the corporation.
D) They are considered as agents of the corporation.
Q:
What is common stock? What are its features?
Q:
Oral evidence of the modification of a contract after its making can be introduced at a trial.
Q:
A monopolistic competitor finds its profit-maximizing rate of output byA) equating the marginal revenue from advertising with the marginal revenue from selling the good.B) setting average revenue equal to average total cost. C) equating marginal revenue and marginal cost.D) equating price and marginal revenue.
Q:
Give an account of publicly held and closely held corporations.
Q:
Oral evidence of otherwise clear terms in a contract can be introduced at a trial to contradict those terms.
Q:
To be enforceable, a writing evidencing an oral contract that would otherwise be unenforceable must be signed by the party who seeks to enforce it.
Q:
A contract between a corporation and a holder that contains the terms of a debt security is known as a(n) ________.
Q:
A(n) ________ is a long-term unsecured debt instrument that is based on a corporation's general credit standing.
Q:
To be enforceable, a memorandum evidencing an oral contract that would otherwise be unenforceable must include all essential terms.
Q:
Authorized shares that have not been sold by the corporation are known as ________.
Q:
An oral contract for a sale of land may be enforceable if the contract has been partially perÂformed.
Q:
A monopolist is maximizing profit at an output rate of 1,000 units per month. At this output rate, the price that its customers are willing and able to pay is $8 per unit, average total cost is $5 per unit, and marginal cost is $6 per unit. It may be concluded that at this monthly output rate, marginal revenue isA) $5 per unit, and the monopolist earns zero economic profits.B) $6 per unit, and the monopolist earns economic profits of $2,000 per month. C) $6 per unit, and the monopolist earns economic losses of $1,000 per month. D) $6 per unit, and the monopolist earns economic profits of $3,000 per month.
Q:
Stock that permits a corporation to buy back the preferred stock at some future date is known as ________.
Q:
To be enforceable, a contract for a sale of goods priced at $50 or more must be in writing.
Q:
The articles of incorporation is also known as the ________.
Q:
A party's oral agreement to pay another's debt is never enforceable.
Q:
A(n) ________ is a person or a corporation that is empowered to accept service of process on behalf of a corporation and is identified in the articles of incorporation.
Q:
All collateral promises must be in writing to be enforceable.
Q:
A corporation that is incorporated in another country is known as a(n) ________ corporation.
Q:
A contract must be in writing to be enforceable unless its performance is impossiÂble within one year.
Q:
A note is a long-term debt security that is secured by some form of collateral.
Q:
A situation in which the price charged is greater than societyʹs opportunity cost would lead toA) too little being produced. B) too much being produced. C) an efficient amount being produced. D) marginal cost pricing.
Q:
A contract may have to be in writing to be enforceable even if its performance is possible within a year.
Q:
Secured bondholders can foreclose on the collateral in the event of nonpayment of interest or principal.
Q:
A contract involving a sale is the only contract relating to an interest in land that must be in writing to be enforceable.
Q:
In debt securities, the corporation is the debtor and the holder is the creditor.
Q:
A contract involving property of any kind must be in writing to be enforceable.
Q:
Only outstanding shares have the right to vote.
Q:
Under the Statute of Frauds, all contracts induced by fraud must be in writÂing to be enforceable.
Q:
Treasury shares cannot be reissued by a corporation.
Q:
What does a perfectly competitive firm do to maximize profits?
Q:
Under the Statute of Frauds, all written contracts are enforceable.
Q:
Shares that are repurchased by a corporation are called unissued shares.
Q:
Authorized shares that have been sold by a corporation are called issued shares.
Q:
Under the Statute of Frauds, oral contracts are void.
Q:
Forcing someone to enter into a contract through fear created by threats is undue influence.
Q:
Convertible preferred stock permits the preferred stockholders to convert their shares into common stock.
Q:
A contract entered into under duress is voidable.
Q:
In case a corporation's assets are liquidated, the preferred stockholders are paid before common stockholders.
Q:
Marginal costs will begin to rise at the point whereA) fixed costs increase. B) variable costs increase.C) average variable costs increase. D) diminishing marginal product begins.