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Questions
Q:
To rescind a contract for fraud, a plaintiff must prove an injury.
Q:
Preferred stockholders are given the right to vote for the board of directors of the corporation.
Q:
Common stockholders receive dividends declared by the board of directors.
Q:
Reliance on a misrepresentation is justified if the misrepresentation is an obviously extravagant statement.
Q:
An S corporation election is made by filing a Form 2553 with the Federal Trade Commission.
Q:
Intent to deceive is an element of fraud.
Q:
An S corporation cannot have more than 100 shareholders.
Q:
Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies together, and three workers can produce 65 cookies together. What is the marginal product of the 3rd worker?A) 21.67 cookies B) 65 cookies C) 30 cookies D) 35 cookies
Q:
Scienter exists if a party makes a statement that he or she does not beÂlieve is true.
Q:
Misrepresentation of a material fact cannot occur through conduct alone.
Q:
A C corporation pays taxes at the corporate level and also at the shareholder level.
Q:
An S corporation can have nonresident aliens as shareholders.
Q:
Misrepresentation of an opinion is an element of fraud.
Q:
Any corporation with more than 100 shareholders is automatically considered a C corporation for federal income tax purposes.
Q:
Suppose that during a given time period the implicit cost for a business was $1,500 and that the explicit cost was $6,000. Also suppose that the firm sold 1,000 units of its products at $7 per item. We can conclude that the firmʹsA) accounting profit was $1,000, and its economic profit was -$500. B) accounting and economic profits were both $1000.C) accounting profit was -$500, and economic profit was $1,000. D) accounting profit was $1000, and economic profit was -$1,500.
Q:
An innocent party may seek damages for a fraudulent contract.
Q:
Foreign corporations can elect to be taxed as an S corporation.
Q:
An innocent party can enforce a fraudulent contract.
Q:
An S corporation must pay federal income tax at the corporate level.
Q:
Overestimating the value of an object is a mistake for which a court will normally provide relief.
Q:
The shareholders of a corporation have the absolute right to amend the bylaws.
Q:
If a price quotation contains a mistake in the adding of a number of figÂures, the contract may not be enforceable.
Q:
The bylaws of a corporation must be filed with a government official.
Q:
When indifference curve analysis is used, a consumer optimum occurs at the point at whichA) the indifference curves intersect.B) the indifference curve is tangent to the budget line. C) total utility is maximum.D) marginal utility/price ratio of all goods consumed is equal.
Q:
Provisions concerning the limitation or regulation of powers of the corporation cannot be included in the articles of incorporation.
Q:
In a transaction for the sale of a warehouse, Standard Storage Company tells Tri-County Investment Corporation that the office furniture is inÂcluded. The contract says nothing about office furniture, but does state, "This document supercedes all oral promises relating to the sale." Is the furniture part of the sale? Why or why not?
Q:
Corporations cannot provide their articles of incorporation online.
Q:
Frances has lived in an apartment for ten years when she decides to buy a house. Her one-year lease will end on May 1. On April 15, she orally conÂtracts to buy Smith's house for $100,000, with the closing (transfer of the deed) to take place on June1. Smith's lawyer, who is out of town on vacaÂtion, is to draft a written contract of sale on his return to his office on May 15. Because Frances's lease is terminating, Smith agrees to let her take possession of the house on May 1 if Frances gives him a "down payment" on the house of $5,000. Frances agrees and gives Smith the $5,000. She moves into the house on May 2, and the following weekend plants trees in the back yard. On May 10, Smith receives a written offer from Green to buy Smith's house for $120,000. Smith accepts Green's offer, asks Frances to move out of the house, and tries to return the $5,000 to Frances. Frances claims that she has an enforceable contract to buy the house. Smith claims that any such contract must be in writing to be enÂforceable under the Statute of Frauds. Who is correct and why?
Q:
The articles of incorporation must contain the name and address of every incorporator.
Q:
Waterfront Hotels Corporation in Boston offers a job to Carol, who lives in Denver. Carol orally agrees to work for Waterfront for two years. She moves her family to Boston and begins work. Three months later, she is fired for no stated cause. She files a suit against the employer for reinÂstatement or pay. Waterfront pleads the lack of a written conÂtract. In whose favor is the court likely to rule, and why?
Q:
A corporation can be incorporated in several states.
Q:
For any two goods, X and Y, if MUX divided by PX equals 2.5 and MUY divided by PY equals 4.0, then with given income and prices the consumer shouldA) buy more of good X and less of good Y.B) buy more of good Y and less of good X. C) buy all of good Y and no X.D) stop because an equilibrium is achieved.
Q:
Multi Investments, Inc., offers to buy Nano Toy Corporation. On May 1, Nano provides copies of its financial statements for the preÂvious year, showing an inventory of $10 million. On May 15, Nano discovers that the previous year's inventory is overstated by $5 million, but does not inform Multi. On June 1, Multi, relying on the fiÂnancial statements, buys Nano. On June 10, the buyer discovers the invenÂtory overÂstatement. Can Multi succeed in a suit against Nano for fraud?
Q:
Baby Products, Inc., hires Cole to develop and implement an e-commerce strategy for marketing Baby's products. Cole signs a contract that inÂcludes a clause prohibiting him from competing with Baby during and afÂter the employment. Before the strategy is implemented, Cole resigns from Baby's employ and opens a business to compete with Baby. In Baby's suit against Cole, to determine whether Cole may compete with Baby, what is the most important factor the court should consider?
Q:
A corporation is a foreign corporation in states other than the one in which it is incorporated.
Q:
In State X, persons must be at least eighteen years old before they can purchase alcoholic beverages. The state also has passed a law requiring that persons who prepare and serve liquor in the form of drinks in comÂmercial establishments be licensed. The only requirement for obtaining a yearly license is that the person be at least eighteen years old. Moffitt, aged thirty-five, is hired as a bartender for Lone Star Restaurant. Bekins, an alumnus of State X University, brings twenty of his friends to the restaurant to celebrate State X U's football victory. Bekins orÂders four rounds of drinks, and the bar bill exceeds $200. When Bekins learns that Moffitt has failed to renew his bartender's license, Bekins reÂfuses to pay, claiming the contract is unenforceable. Is Bekins correct? Explain.
Q:
Private corporations range from small one-owner corporations to large multinational corporations such as Microsoft Corporation.
Q:
Which of the following is true of a note?
A) It is a long-term unsecured debt instrument that is based on a corporation's general credit standing.
B) It is a long-term debt security that is secured by some form of collateral.
C) It can be either unsecuredor secured.
D) It contains a conversion feature.
Q:
Chris promises Dina $40,000 if she graduates from Eagle College. Dina enrolls in Eagle, attends full-time for four years, and graduates. When Dina asks Chris for $40,000, Chris says, "I don"t reÂmember promising you $40,000. But if there was a promise, it's not enÂforceable, because we didn"t bargain for it. And even if there was a promÂise that would otherwise be enforceable, I revoke it now." Can Dina enÂforce Chris's "promÂise"? Why or why not?
Q:
When Fredʹs income was $100 per week, 10 units of good X were demanded. Now his income is $150 per week and 12 units of good X are demanded. Using the percentage change formula, the income elasticity of demand for good X equals .A) 0.45 B) 0.40 C) 2.20 D) 2.50
Q:
A(n) ________ is a debt security with a maturity of five years or less.
A) bond
B) debenture
C) indenture
D) note
Q:
Flossy promises to pay her cousin Garth, who is dangerously obese, $10,000 if Garth loses 100 pounds within the next two years. Garth agrees, perÂforms his part of the barÂgain, and asks for the money. Flossy refuses to pay, sayÂing that she forgot about the deal, but that even if she did make such a pledge, there was no valid consideration for it. Garth files a suit against Flossy. In whose favor is the court likely to rule, and why?
Q:
A long-term debt security that is secured by some form of collateral is referred to as a ________.
A) treasury share
B) bond
C) note
D) debenture
Q:
Through fraudulent means, Fred induces Gail to sign a contract to build resort cabins on land that Fred does not own. Gail performs, but Fred does not pay. When Gail learns the truth, she may
a. do nothing with respect to the contract.
b. recover for the performance or its value.
c. recover for the performance only.
d. recover the value of the performance only.
Q:
Securities that establish a debtor-creditor relationship in which the corporation borrows money from the investor to whom a debt security is issued are known as ________.
A) authorized shares
B) preferred stocks
C) common stocks
D) fixed income securities
Q:
Cross-Country Trucking Company contracts with Baldwin to transport crated goods to a certain destination for $5,000. Cross-Country delivers the crates, but Baldwin does not pay. Cross-Country learns that the crates contained stolen goods. Cross-Country can
a. do nothing with respect to the contract.
b. recover $5,000 from Baldwin.
c. recover the goods but not the $5,000 from Baldwin.
d. recover the goods or the $5,000 from Baldwin.
Q:
Which of the following is true of treasury shares?
A) They cannot be issued by the corporation.
B) They cannot be voted by the corporation.
C) They are owned by shareholders.
D) They are entitled to receive dividends.
Q:
ʺThe slope of the demand curve gives the elasticity of demand.ʺ Do you agree or disagree?
Why?
Q:
Boz runs an illegal gambling business and pays Colin, a police officer, not to interfere. The payments are discovered. Boz and Colin are sent to prison. With respect to the amount of the payments, Boz can recover
a. all of it.
b. none of it.
c. only as much as Colin has not spent.
d. only as much as Colin has spent.
Q:
A contract between a corporation and a holder that contains the terms of a debt security is known as a(n) ________.
A) option contract
B) right of first refusal
C) indenture
D) shareholder voting agreement
Q:
Odell owns Payroll Company, a bookkeeping service losing market share to Quik Work, Inc. Odell pays Remy $5,000 to steal a list of Quik's clients, to whom Odell will aggressively market Payroll"˜s services. This deal is
a. enforceable.
b. void.
c. voidable at the option of either party.
d. voidable at the option of the party having less bargaining power.
Q:
Issued shares that have been repurchased by the corporation are referred to as ________ shares.
A) outstanding
B) liquidated
C) unissued
D) treasury
Q:
A contract between Donald and Chloe to lease commercial property contains an exÂculÂpatory clause. This clause is
a. enforceable as a matter of public policy.
b. enforceable if either party is in a business important to the pubÂlic.
c. enforceable if an event occurs to which the clause applies.
d. generally unenforceable.
Q:
Which of the following shares have the right to vote?
A) unissued shares
B) treasury shares
C) outstanding shares
D) liquidated shares
Q:
U-Can-Own-It Corporation sells appliances to less educated consumers, including Vi, on installment plans. U-Can-Own-It files a suit against Vi when she stops making payments. Vi claims that the deal is unconscionable. The court will most likely consider
a. the geographic area of the relevant market.
b. the parties' relative bargaining power.
c. the quality of related products in the general market.
d. the relation of this deal to those of other customers.
Q:
Stock for which any missed dividend payments must be paid in the future to the preferred shareholders before the common shareholders can receive any dividends is known as ________ stock.
A) cumulative preferred
B) noncumulative preferred
C) common
D) participating preferred
Q:
Your neighbor in an apartment complex plays his music very loudly late at night, which makes it difficult for you to get to sleep. You offer the neighbor $50, the monetary value you put on your sleep, to never play his music between midnight and 7 AM. By doing so,A) you have failed to bring about an efficient solution since you should have complained to the police.B) you have indicated the cost of the externality. The externality is not internalized even if he accepts your offer.C) you have indicated the cost of the externality, which internalizes the externality. D) you have indicated a willingness to make the external cost a social cost.
Q:
Jon agrees to sell his K9 Sports Equipment store to Lacy. As part of the sale, Jon promises never to open a similar, competing store anywhere. Jon's promise is most likely
a. invalid because it is part of a sale of an ongoing business.
b. invalid because of the unreasonable terms of area and time.
c. valid because it is part of a sale of an ongoing business.
d. valid because Jon and Lacy apparently have the capacity to contract.
Q:
A ________ is a preferred stockholder's right to be paid a stated dollar amount if a corporation is dissolved and its assets redistributed.
A) noncumulative preference
B) cumulative dividend preference
C) dividend preference
D) liquidation preference
Q:
Neil represents himself as a contractor in Ohio, but he is not licensed in that state. A contract between Pam and Neil by which Neil agrees to build a warehouse for Pam in Ohio is
a. enforceable only if Pam does not object after learning of Neil's status.
b. enforceable only if Pam knows that Neil is unlicensed.
c. enforceable only if the outcome is successful.
d. not enforceable.
Q:
________ is a type of equity security that represents the residual value of a corporation.
A) Common stock
B) Preferred stock
C) Cumulative preferred stock
D) Participating preferred stock
Q:
Eli obtains a consumer loan from First State Bank at an interest rate that exceeds the state's maximum. First State has
a. calculated the optimum rate that the market will bear.
b engaged in a restraint of trade.
c. underestimated the risk of the loan's nonpayment.
d. violated the usury laws.
Q:
Which of the following criteria must be satisfied for a corporation to be treated as an S corporation?
A) The corporation's shareholders must be other corporations or partnerships.
B) The corporation's shareholders must be citizens or residents of the United States.
C) The corporation must have more than 100 shareholders.
D) The corporation must have more than one class of stock.
Q:
Which of the following is true of an S corporation?
A) It can have no more than 100 shareholders.
B) Only a foreign corporation can become an S corporation.
C) It is taxed at the corporate level.
D) It must be a member of an affiliated group of corporations.
Q:
Since the 1930s, out-of-pocket payments for health care have A) declined from about 50 to 30 percent of total payments. B) declined from about 95 to 20 percent of total payments. C) declined from about 70 to 30 percent of total payments. D) not changed and remain at 70 percent of total payments.
Q:
Fay is mentally incompetent but has not been so adjudged by a court. Any contract Fay enters into is
a. voidable if Fay has a lucid interval at the time of contracting.
b. voidable if Fay lacks the capacity to comprehend the consequences.
c. voidable if the other party does not realize that Fay is incompetent.
d. unavoidable.
Q:
Which of the following is true of a C Corporation?
A) It does not pay taxes at the corporate level.
B) Shareholders of such a corporation are not required to pay taxes on their dividends.
C) Any corporation with more than 100 shareholders is automatically a C corporation for federal income tax purposes.
D) Nonresident aliens cannot be shareholders unless they demonstrate due diligence in meeting federal requirements for residency status.
Q:
A court adjudicates Huck mentally incompetent and appoints Inez to be his guardÂian. Later, without Inez's knowledge, Huck signs a contract to sell his farm to Kyle for its real market value. The contract is
a. enforceable if Huck comprehended the consequences.
b. enforceable if Huck knew the market value of the farm.
c. enforceable if Huck was the record owner of the farm.
d. void.
Q:
Which of the following is true of corporate bylaws?
A) They only contain rules addressing how the corporation can interact with the government.
B) They are only adopted by the shareholders of the corporation.
C) They are not binding on the directors or shareholders of the corporation.
D) They do not have to be filed with any government official.
Q:
Orin enters into a contract with Natalie. Later, Orin is adjudged mentally incompetent and Moseby is appointed Orin's guardian. Lila, Orin's daughter, attempts to void Orin's contract with Natalie on the ground of Orin's incompetency. The contract is
a. enforceable if Orin does not attempt to disaffirm it.
b. enforceable if Natalie is also incompetent.
c. enforceable if Moseby knew of the contract when he was appointed.
d. void.
Q:
A detailed set of rules adopted by the board of directors after a corporation is incorporated that contains provisions for managing the business and the affairs of the corporation are referred to as ________.
A) ultra vires rules
B) articles of incorporation
C) bylaws
D) corporation codes
Q:
Intoxicated, Clio agrees to sell her restaurant, Diners Café, to Evan for half of its real market value. This deal is most likely void if
a. Clio appeared intoxicated to Evan.
b. Clio disaffirms the contract after becoming sober.
c. Clio was so intoxicated as to have no memory of the deal.
d. Evan fraudulently induced Clio to become intoxicated.
Q:
A person or corporation that is empowered to accept service of process on behalf of a corporation is referred to as a(n) ________.
A) promoter
B) shareholder
C) registered agent
D) incorporator
Q:
Intoxicated but fully aware of the consequences, Uri agrees to a two-year cell-phone service contract with Wander Talk, Inc., at more than the average market price. This contract is
a. enforceable.
b. not enforceable because contracting parties can change their minds.
c. not enforceable because the contract clearly favors Wander Talk.
d. not enforceable because Uri was intoxicated when he agreed to it.
Q:
Compared to a sampling of other developed nations, the U.S. income distribution is more unequal than many others. What accounts for this?A) The lowest-income families in the United States earn much less than the lowest -income households in other nations.B) Marginal income tax rates are much higher in the United States than in any other nation.C) The highest-income families in the United States earn much more than the highest -income households in other nations.D) Other nations manipulate their data to look better.
Q:
Which of the following must be included in the articles of incorporation?
A) the minutes of the first organizational meeting of the board of directors
B) the number of shares the corporation is authorized to issue
C) the terms warranting corporate dissolution
D) the corporate seal used in the articles of incorporation
Q:
Mica, a minor, signs a contract to pay Natural Health Club a monthly fee for twenty-four months to use its facilities. Six months later, after reaching the age of majority, Mica continues to use the club. This act is
a. a disaffirmance.
b. an emancipation.
c. a ratification.
d. a necessary.
Q:
________ are the basic governing documents of a corporation which must be drafted and filed with, and approved by, the state before the corporation can be officially incorporated.
A) Debt securities
B) Debentures
C) Certificates of authority
D) Articles of incorporation
Q:
On Tom's eighteenth birthday, he decides that he no longer wants to keep a car he bought from U-Pick Autos, when he was seventeen. His right to disaffirm the deal will depend on
a. the car's condition when Tom bought it.
b. the car's current condition.
c. whether Tom acts within a reasonable period of time.
d. whether U-Pick has the right to disaffirm.
Q:
Which of the following is true of a corporation's incorporation in a state?
A) Domestic corporations can incorporate in only one state.
B) Domestic corporations can incorporate in all states in which they conduct business.
C) Alien corporations can only incorporate in one state.
D) Foreign corporations can incorporate in more than one state.