Reference no: EM133857161
Question
1. Mariposa is a shareholder of Tuscan Corporation. If she is acting in good faith, under the Model Act she has the right to do all but which of the following?
a. Inspect the company's accounting records
b. Vote on a merger proposal
c. Examine the company's minute book
d. Manage day-to-day affairs of the corporation
2. Andrea was an up-and-coming music producer at Too Loud Productions. One night while out at the clubs, Andrea discovered a new singer, Dylan. Andrea approached Dylan after the show and gave him her card. Andrea offered to sign Dylan to a contract but told him that she still needed the approval of the New Talent Committee. Dylan celebrated his new deal by buying a new car. The next week, the New Talent Committee denies Andrea's request. Is Dylan entitled to damages?
a. Yes, Andrea acted with apparent authority when offering Dylan the deal.
b. Yes, Andrea acted with express authority when offering Dylan the deal.
c. Yes, Andrea acted with implied authority when offering Dylan the deal.
d. No, Andrea made it clear that she did not have the authority to offer the deal without approval from the New Talent Committee
3. 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.
b. 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.
4. Pamela hired Mariana to sell her business. Mariana
a. can buy the business as long as the price is fair.
b. can buy the business as long as she qualifies for financing.
c. can buy the business only with Pamela's permission.
d. cannot buy the business under any circumstances.
5. When a partner leaves a partnership, whether it be voluntary or by expulsion, death, or bankruptcy, it is called
a. dissociation.
b. termination.
c. detachment.
d. separation.
6. Tamika owns 1,000 shares of stock in Temperan Inc. Tamika wants to obtain corporate records, including the corporation's minute book and accounting records. Under the Model Act, Tamika is entitled to this information if she requests it in good faith and she
a. has a proper purpose.
b. owns at least 1 percent of the company or $2,000 of stock.
c. is an employee of Temperan.
d. is a controlling shareholder.
7. An agent may not engage in inappropriate behavior that reflects badly on the principal. This rule applies to conduct
a. during working hours.
b. during off-duty time.
c. during both working hours and off-duty time.
d. only by public officials.
8. The shareholders of New Energy Inc., a solar panel producer, received an offer from A New Day LLC, another solar producer, to buy all the shares of the company. Jayden believes that the offer is too low and is looking to gather information. In doing so, he can
a. only gather information from public sources.
b. inspect New Energy's books and records to determine the value of the stock.
c. inspect the books and records of both New Energy and A New Day to determine the fairness of the transaction.
d. inspect only the records of A New Day and not New Energy.
9. 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.
10. Devanie 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 Devanie's potential liability?
a. Devanie has no potential liability to the customer.
b. Devanie can be held personally liable to the customer because she is the owner.
c. Devanie can only be liable up to the amount she initially invested in the business.
d. Devanie cannot be held personally responsible; the woman's insurance must pay for the claim.
11. Malik owned 5 percent of a very successful commercial real estate business that was organized as a close corporation. Malik found out that the majority shareholders had purchased the depressed commercial assets of one of the founder's children for a premium price. Does Malik have any rights?
a. No, when a majority of the shareholders vote to engage in a particular business transaction, the corporation must do so regardless of the wishes of the minority shareholders.
b. No, unless Malik can convince the other shareholders to vote to repeal the deal.
c. No, minority shareholders have no rights in close corporations as compared to C corporations.
d. Yes, the majority shareholders have arguably breached their fiduciary duties to the minority shareholders.
12. In many ways, a limited liability company can be thought of as a cross between a
a. corporation and a franchise.
b. joint venture and a partnership.
c. corporation and a sole proprietorship.
d. sole proprietorship and a social enterprise.