Chapter 18 quiz Flashcards
Bea transfers shares of stock that she owns in Coin Laundry Corporation to Dick. A shareholders’ meeting takes place before his ownership is entered in the firm’s stock book. A vote at the meeting can be cast by
a. Bea.
b. Bea and Dick.
c. Dick.
d. none of the choices.
a
Blair and Chanel are holders of common stock in Discount Retail Stores, Inc. Like other holders of common stock, they have a residual position in the overall financial structure of Discount Retail, because they
Answers:
Correcta. are the last to receive returns for their investment.
b. are guaranteed to receive more than the amount of their investment.
c. have priority to the firm’s assets if it becomes insolvent.
d. reside in the state of the firm’s incorporation.
a
Brad is a shareholder of Cloud Servers Inc. He will be deemed to have a fiduciary duty to Cloud and its minority shareholders if he has a sufficient number of shares to
Answers:
Correcta. exercise de facto control.
b. participate in a cumulative vote.
c. bring a shareholder’s derivative suit.
d. assert the business judgment rule.
a
Daryl, Elsa, and Ferris are the directors of Go Apps, Inc. Go also has four officers and fourteen shareholders. Dividends can be ordered by the firm’s
Answers:
a. minority shareholders.
Correctb. board.
c. majority shareholders.
d. officers.
b
Dennis and Eve want to form and do business as a corporation—Farm-2-Fork Inc. This corporation will be recognized under the law as
Answers:
a. a non-entity.
b. a natural being.
c. a tangible thing.
Correctd. an artificial legal person.
d
EZ Hauling holds itself out to customers as being a corporation but makes no attempt to incorporate. In this circumstance, EZ Hauling is most likely
Answers:
Correcta. a corporation by estoppel.
b. a benefit corporation.
c. a de facto corporation.
d. a de jure corporation.
a
Gavin is a shareholder of Houseboats Inc. with preemptive rights. With these rights, he can
Answers:
a. preempt managerial decisions that affect shareholders.
b. sell a prorated share of a new issue of stock before other sellers.
c. choose to have the firm act exclusively in a certain area.
Correctd. buy a prorated share of a new issue of stock before other buyers.
d
Harry and Ilene want to market a new line of kayaks and related gear under the brand name Journeys as a corporation—Journeys Inc. To avoid income taxes at the corporate level, they should form
Answers:
a. an alien corporation.
b. a private corporation.
c. a close corporation.
d. an S corporation.
d
Ida and Jay are the directors of Keystone Property Management Inc. Lily and Mike are Keystone officers. Nina is a Keystone shareholder. The responsibility for the overall management of this firm rests with
Answers:
a. Lily and Mike.
b. Ida and Jay.
c. none of the parties.
d. Nina
b
Mike is a shareholder of NatGas, Inc. NatGas uses cumulative voting to elect directors. This means that the number of Mike’s votes is determined by the number of
Answers:
a. years that he has been a shareholder.
b. shareholders present at the shareholders’ meeting.
c. shareholders’ meetings that he has attended
d. members of the board to be elected multiplied by the total number of voting shares that he holds.
d
