Question 1

Health Food Inc. coordinates the purchase, sale, and delivery of organic products. The stated corporate purpose is to make a profit and to have a material positive impact on society and the environment. Health Food is

Accepted Answer

A)   a nonprofit corporation.
B)   not a corporation.
C)   a benefit corporation.
D)   a private corporation.E) B) and D)
F) B) and C)

Question 2

Paddle & Portage Corporation is poised to issue securities that, under the Securities Act of 1933, are "exempt." This means that the securities can be sold

Accepted Answer

A)   on the basis of a material omission or misrepresentation.
B)   on the basis of nonpublic information .
C)   within any six-month period by certain insiders.
D)   without being registered.E) A) and B)
F) A) and C)

Question 3

Soap Products Inc. is a corporation. Soap can be held liable for the acts of its agents or employees that constitute

Accepted Answer

A)   neither crimes nor torts.
B)   crimes only.
C)   torts only.
D)   crimes or torts.E) A) and C)
F) B) and C)

Question 4

The primary document needed to incorporate a business is

Accepted Answer

A)   the website of the secretary of state of the state of incorporation.
B)   the minutes of the first organizational meeting.
C)   the articles of incorporation.
D)   the bylaws.E) None of the above
F) A) and B)

Question 5

If a shareholder's derivative suit is successful, any damages recovered normally go into the corporation's treasury.

Accepted Answer

A) True 
 B)False

Question 6

The Securities and Exchange Commission does not exempt any securities from the registration requirement of the Securities Act of 1933.

Accepted Answer

A) True 
 B)False

Question 7

Thin Ice Inc., a corporation, dissolves. Thin's net corporate assets will be used first to pay

Accepted Answer

A)   federal and state taxes.
B)   common stockholders.
C)   preferred stockholders.
D)   bondholders.E) B) and C)
F) All of the above

Question 8

Issuing securities is the only way for a new corporation to raise capital.

Accepted Answer

A) True 
 B)False

Question 9

The Securities Exchange Act of 1934 requires that a regulated corporation make periodic disclosures about its organization and financial situation.

Accepted Answer

A) True 
 B)False

Question 10

Mars Mission Inc. is a publicly held corporation. Under the Securities Act of 1934, Mars is required to

Accepted Answer

A)   contribute to the operations of national stock exchanges.
B)   disclose information about its organization and financial situation.
C)   engage in market surveillance to deter undesirable practices.
D)   keep information about its stock sales and ownership confidential.E) A) and B)
F) All of the above

Question 11

A majority shareholder has fiduciary duties to the corporation but not to the minority shareholders.

Accepted Answer

A) True 
 B)False

Question 12

A corporation is a legal entity created and recognized by federal law.

Accepted Answer

A) True 
 B)False

Question 13

The primary document needed to incorporate a business is the bylaws.

Accepted Answer

A) True 
 B)False

Question 14

Power Products Corporation permits its directors to be elected by cumulative voting. This

Accepted Answer

A)   allows minority shareholders to be represented on the board.
B)   assures directors that they will be selected by their peers.
C)   guarantees Power's executive officers of the final choice.
D)   ensures against persons who may "cloud" the corporate direction.E) None of the above
F) A) and D)

Question 15

Securities of publicly held corporations do not need to be registered before they can be resold.

Accepted Answer

A) True 
 B)False

Question 16

Sheila is a shareholder of Travels & Trips Inc. She has the right to inspect corporate books and records

Accepted Answer

A)   only if she is also a director.
B)   without restrictions.
C)   for a proper purpose.
D)   under no circumstances.E) All of the above
F) C) and D)

Question 17

Trail Bike Corporation offers a new issue of securities for sale. Under the Securities Act of 1933, Trail Bike is required to

Accepted Answer

A)   contribute to the operations of national stock exchanges.
B)   disclose financial and other information about the proposed sale.
C)   engage in market surveillance to deter undesirable practices.
D)   make periodic disclosures about the corporate organization and finances.E) A) and C)
F) B) and D)

Question 18

Federal law does not require that investors receive financial and other important information concerning the securities being offered for public sale.

Accepted Answer

A) True 
 B)False

Question 19

Rosa and Sean are shareholders of Tasty Tacos Inc. Rosa's written authorization to Sean to vote Rosa's shares at a shareholders' meeting is

Accepted Answer

A)   a corporate resolution.
B)   cumulative voting.
C)   a proxy.
D)   a quorum requirement.E) None of the above
F) All of the above

Question 20

A corporation may not be held liable for the criminal acts of its agents and employees.

Accepted Answer

A) True 
 B)False

Exam 29: Formation and Ownership of a Corporation

The Securities Exchange Act of 1934 requires that a regulated corporation make periodic disclosures about its organization and financial situation.

Correct AnswerverifiedShow Answer

A corporation may not be held liable for the criminal acts of its agents and employees.

Correct AnswerverifiedShow Answer

Securities of publicly held corporations do not need to be registered before they can be resold.

Correct AnswerverifiedShow Answer

Thin Ice Inc., a corporation, dissolves. Thin's net corporate assets will be used first to pay

Correct AnswerverifiedShow Answer

Issuing securities is the only way for a new corporation to raise capital.

Correct AnswerverifiedShow Answer

If a shareholder's derivative suit is successful, any damages recovered normally go into the corporation's treasury.

Correct AnswerverifiedShow Answer

Sheila is a shareholder of Travels & Trips Inc. She has the right to inspect corporate books and records

Correct AnswerverifiedShow Answer

A majority shareholder has fiduciary duties to the corporation but not to the minority shareholders.

Correct AnswerverifiedShow Answer

Paddle & Portage Corporation is poised to issue securities that, under the Securities Act of 1933, are "exempt." This means that the securities can be sold

Correct AnswerverifiedShow Answer

Trail Bike Corporation offers a new issue of securities for sale. Under the Securities Act of 1933, Trail Bike is required to

Correct AnswerverifiedShow Answer

A corporation is a legal entity created and recognized by federal law.

Correct AnswerverifiedShow Answer

Soap Products Inc. is a corporation. Soap can be held liable for the acts of its agents or employees that constitute

Correct AnswerverifiedShow Answer

The primary document needed to incorporate a business is

Correct AnswerverifiedShow Answer

The Securities and Exchange Commission does not exempt any securities from the registration requirement of the Securities Act of 1933.

Correct AnswerverifiedShow Answer

Rosa and Sean are shareholders of Tasty Tacos Inc. Rosa's written authorization to Sean to vote Rosa's shares at a shareholders' meeting is

Correct AnswerverifiedShow Answer

Health Food Inc. coordinates the purchase, sale, and delivery of organic products. The stated corporate purpose is to make a profit and to have a material positive impact on society and the environment. Health Food is

Correct AnswerverifiedShow Answer

Federal law does not require that investors receive financial and other important information concerning the securities being offered for public sale.

Correct AnswerverifiedShow Answer

Power Products Corporation permits its directors to be elected by cumulative voting. This

Correct AnswerverifiedShow Answer

The primary document needed to incorporate a business is the bylaws.

Correct AnswerverifiedShow Answer

Mars Mission Inc. is a publicly held corporation. Under the Securities Act of 1934, Mars is required to

Correct AnswerverifiedShow Answer

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