81) A(n) ________ is a debt security with a maturity of five years or less.
A) bond
B) debenture
C) indenture
D) note
82) Which of the following has a fixed maturity date?
A) bonds
B) common stock
C) cumulative preferred stock
D) participating preferred stock
83) Owners of a corporation who elect the board of directors and vote on fundamental changes in
the corporation are known as ________.
A) corporate officers
B) shareholders
C) registered agents
D) managing directors
84) 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.
85) When is the annual shareholders’ meeting held?
A) according to the dates fixed in the bylaws
B) at the whim of the board of directors
C) only if and when there is a crisis
D) only at the time of electing a new board of members
86) The written document submitted by a person who has been authorized by a shareholder to
vote the shareholder’s shares at the shareholders’ meetings in the event of the shareholder’s
absence is known as ________.
A) record date
B) notice of shareholder’s meeting
C) certificate of authority
D) proxy card
87) 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 RMBCA, what is the minimum 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
88) 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. If
an Inkilwas Corporation amendment for its articles of incorporation is put to vote at this meeting,
which of the following statements would be true with respect to the passing of the amendment?
A) The amendment would not pass as all 30,000 votes have to be represented.
B) The amendment would only pass if all 17,501 votes approve.
C) The amendment would be passed if 4,376 votes approve.
D) The amendment will pass if 8,751 votes approve.
89) 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 3000 shares. Suppose that
two directors of the corporation are to be elected from a potential pool of 5 candidates. Ester is in
favor of Candidates 1 and 5; Mendez in favor of Candidates 2 and 4; Judy in favor of Candidates
4 and 3; and Aaron in favor of Candidates 2 and 3. If the voting was done by straight voting,
which of the two candidates are likely to win?
A) Candidate 1 and Candidate 5
B) Candidate 1 and Candidate 4
C) Candidate 2 and Candidate 3
D) Candidate 2 and Candidate 4
90) Derrick has 2,000 shares of the Unistone Corporation which is planning to vote for two new
directors. Through a special voting provision in the corporation’s articles of incorporation,
Derrick was able to vote for both his preferred candidates with 2,000 shares, giving him a virtual
voting count of 4,000 shares. What voting rule in the articles of incorporation allows Derrick to
achieve this?
A) supramajority voting
B) noncumulative voting
C) cumulative voting
D) preemptive voting
91) The Merrick and Stanley Corporation has 28,000 outstanding shares. During a proposal for a
merger, the shareholders decided 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
92) According to the RMBCA, what establishes a quorum to hold a meeting of the shareholders?
A) a majority of outstanding shares
B) a majority of unissued shares
C) a majority of treasury shares
D) a majority of liquidated shares
93) ________ 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 vote
94) An agreement that requires selling shareholders to sell their shares to the other shareholders
or to the corporation at the price specified in the agreement is referred to as ________.
A) preemptive sale
B) right of first refusal
C) buy-and-sell agreement
D) shareholder voting agreement
95) 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.
96) 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 it itself
B) when unpaid creditors are trying to collect from shareholders who owe a debt to the
corporation
C) when there is a mismanagement of stocks by the board of directors
D) when shareholders are trying to collect for fraud committed by a third-party
97) Which of the following are considered as owners of a corporation?
A) shareholders
B) board of directors
C) the CEO
D) corporate officers
98) ________ are a panel of decision makers who are elected by the shareholders.
A) Registered agents
B) Corporate officers
C) Stakeholders
D) Board of directors
99) 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
100) ________ 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
101) Which of the following policies helps a corporate officer from being sued for honest
mistakes made on behalf of a corporation?
A) duty of loyalty
B) duty of obedience
C) business judgment rule
D) self-dealing
102) A duty that directors and officers have not to 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) duty of care
B) duty of loyalty
C) duty of obedience
D) self-dealing
103) Which of the following would be seen as 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
104) Helen works as the vice-president of Gotspeed Corporation, a company that develops and
sells sports shoes. Nestor, a private cobbler, makes a new model of shoes that help a user’s feet
grip the shoe better, and he calls it the Anklator. Nestor’s friend fixes an appointment for him
with Helen to present his shoe model for possible adoption by Gotspeed. Instead of bringing the
opportunity to Gotspeed’s board of directors and the corporation, Helen pays Nestor’s asking
price and purchases the Anklator model for herself. Helen leaves Gotspeed Corporation and
forms her own company that manufactures and markets the Anklator shoe models. What breach
of the duty of loyalty has Helen committed here?
A) self-dealing
B) usurping a corporate opportunity
C) making a secret profit
D) competing with the corporation
105) Jameson works for Fishy-Mart Corporation, a chain of superstores that sell large quantities
of seafood. Jameson’s job is to locate future sites for Fishy-Mart stores. Jameson finds a piece of
real estate near a coastline that would make a great site for a Fishy-Mart store. Jameson tells his
friend to purchase the property from its current owner, which he does. Jameson has a secret
agreement with his friend to split the profits when he sells the property to Fishy-Mart. Jameson,
without disclosing his interest in the property, recommends the site to Fishy-Mart, which then
purchases the property from Jameson’s friend. The friend splits the profits with Jameson. What
breach of the duty of loyalty has Jameson committed here?
A) usurping a corporate opportunity
B) self-dealing
C) competing with the corporation
D) proxy
106) Marshall is the purchasing agent for the DigitoolArt Corporation. His duties require him to
negotiate and execute contracts to purchase office supplies and equipment for the corporation.
Assume that Bronson, a computer salesperson, pays Marshall a $20,000 kickback to purchase
from him computers needed by the DigitoolArt Corporation. What breach of the duty of loyalty
has Marshall committed here?
A) competing with the corporation
B) making a secret profit
C) self-dealing
D) usurping a corporate opportunity
107) According to the provisions set forth by the Sarbanes-Oxley Act, the ________, a federal
government agency, may issue an order prohibiting any person who has committed securities
fraud from acting as an officer or a director of a public company.
A) United States International Trade Commission
B) Federal Reserve System
C) Federal Communications Commission
D) Securities and Exchange Commission
108) Which of the following best defines a surviving corporation?
A) a corporation that continues its operations after filing for bankruptcy
B) a corporation that has been in existence for at least 50 years
C) a proprietorship or partnership that evolved into a corporation
D) a corporation that continues to exist after a merger
109) Karlovsky and Sons Inc., a retail corporation reports financial losses for three years in a
row. Two larger corporations, Gatsby Retail Inc. and Chelsea Sales Corp compete to acquire
Karlovsky and Sons. Initially, Chelsea Corp. places a higher bid than Gatsby Retail Inc. but
eventually backs out of the merger. In the end, a Boston-based MNC named J.Y. Corp. acquires
Karlovsky and Sons and permits the latter to expand as a wholesaler. Which of the following is
the surviving corporation in this scenario?
A) Gatsby Retail Inc.
B) Chelsea Corp.
C) J.Y. Corp.
D) Karlovsky and Sons
110) Which of the following best defines a merged corporation?
A) the corporation that is absorbed in the merger and ceases to exist after the merger
B) the corporation that is absorbed in the merger and continues to exist after the merger
C) the corporation that is not absorbed in the merger but gains stake in the surviving corporation
D) the corporation that is not absorbed in the merger but is owned by a parent company
111) According to priority, which of the following claimants is the last to be paid after assets
have been liquidated of a corporation?
A) creditors
B) common stockholders
C) preferred shareholders
D) bond holders
112) Dissolution of a corporation that has begun business or issued shares upon recommendation
of the board of directors and a majority vote of the shares entitled to vote is known as ________.
A) liquidation
B) judicial dissolution
C) administrative dissolution
D) voluntary dissolution
113) Give an account of publicly held and closely held corporation.
114) What is the CEO and CFO provision laid out by the Sarbanes-Oxley Act of 2002?
115) Explain the business judgment rule followed by corporations when it comes to breach of
duty by directors and officers.
116) What is a merger?
117) What is a common stock? What are its features?
118) A corporation that is incorporated in another country is known as a(n) ________
corporation.
119) 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.
120) The articles of incorporation is also known as a(n) ________.
121) Stock that permits a corporation to buy back the preferred stock at some future date is
known as the ________.
122) Authorized shares that have not been sold by the corporation are known as ________.
123) A ________ is a long-term unsecured debt instrument that is based on a corporation’s
general credit standing.
124) A contract between a corporation and a holder that contains the terms of a debt security is
known as a(n) ________.
125) A shareholder’s authorization of another person to vote the shareholder’s shares at the
shareholders’ meetings in the event of the shareholder’s absence is called a(n) ________.
126) A system in which a shareholder can accumulate all of his or her votes and vote them all for
one candidate or split them among several candidates is known as ________.
127) A requirement that a greater than majority of shares constitutes a quorum of the vote of the
shareholders is known as the ________ requirement.
128) A panel of persons who are elected by the shareholders that make policy decisions
concerning the operation of a corporation is known as a(n) ________.
129) ________ is a doctrine that says if a shareholder dominates a corporation and uses it for
improper purposes, a court of equity can disregard the corporate entity and hold the shareholder
personally liable for the corporation’s debts and obligations.
130) A(n) ________ is a member of a board of directors who is not an officer of the corporation.
131) A director or corporate officer who usurps a corporate opportunity would be violating the
director’s fiduciary duty, called the ________.
132) The ________ Act prohibits public companies from making personal loans to their directors
or executive officers.
133) A(n) ________ is a situation in which one corporation is absorbed into another corporation
and ceases to exist.
134) Involuntary dissolution of a corporation that is ordered by the secretary of state if a
corporation has failed to comply with certain procedures required by law is known as ________.