BUL 3320 Exam 3 Chapters 39,40, and 51 Questions And Answers

Nathan is a director of USA Auto Parts, Inc. Under the standard of due care owed by di¬rectors of a corporation, Nathan's decisions must be: - ANS Informed and reasonable Merina and Neil form Orchids, Inc. Ultimate responsibility for pol¬icy decisions necessary to the management of corporate affairs rests with Orchids': - ANS Board of directors In his will, Bryce makes a gift of $12,000 to Teddy. This is: - ANS A general bequest Preemptive rights are - ANS designed to prevent dilution of a shareholder's ownership in the company. Ray owns Solar Solutions Corporation. Ray uses Solar Solution's funds to pay his personal expenses, creates Thermal Power Corporation to engage in the same business as Solar Solutions, transfers Solar Solution's assets to Thermal Power, and petitions Solar Solutions into bankruptcy. This most likely warrants - ANS a pierce of the corporate veil. A codicil is a will substitute that avoids the cost of probate. - ANS False A method of accomplishing a property transfer without a will is through the joint ownership of property. - ANS True Finn dies without a will. The distribution of Finn's property, including his beachfront house in St. Pete Beach, is prescribed by: - ANS Florida's intestacy laws A trust created in a will is: - ANS A testamentary trust Oliver incorporates his business as Grapes & Wine Corporation in California. He and his group of shareholders intend to make a profit from their sales of fencing materials. Grapes & Wine is: - ANS A private corporation There is a requirement that testators give their estate to the natural heirs. - ANS False Maria is a holder of preferred stock in Rio Grande Development, Inc. Maria has priority over holders of Rio common stock as to: - ANS Payments of dividends A foreign corporation normally does not need a certificate of authority to sell goods or services via the Internet or by mail. - ANS True Quinn is a holder of preferred stock in St. Pete Irrigation & Development, Inc. Quinn has priority over holders of the common stock as to: - ANS Payment of dividends The proceeds, if any, of a derivative lawsuit go to - ANS The corporation Restrictions on the transfer of shares in a close corporation are usually void. - ANS False Genevieve, a twenty-year-old, wants to execute a will before she undertakes a backpacking trip to Europe. In most states, the legal age for executing a will is: - ANS Eighteen A director who does not hold a management position in the corporation is an outside director. - ANS True A publicly held corporation is any corporation whose shares are publicly traded in a securities market. - ANS True An executor is a personal representative named in a will. - ANS True A testamentary trust is created by will and comes into existence on the grantor's death. - ANS True One who dies after having made a valid will is said to have died intestate. - ANS False A director or officer is liable to the corporation or its shareholders for honest mistakes of judgment and bad business decisions. - ANS False A trust created by a will to come into existence on the settlor's death is an irrevocable living trust. - ANS False Preferred stock is an equity security with preferences. - ANS True Dina is an officer of Event Ticketing, Inc. As an officer, with respect to the corporation, Dina is: - ANS A fiduciary Boutique Bodega Corporation would like to change its corporate status to that of an S corporation to avoid in¬come taxes at the corporate level. To qualify, the shareholders must not be: - ANS corporations Preemptive rights permit a director to veto, or "preempt," any proposal that the shareholders have voted to approve or disapprove. - ANS False Marissa's will states, "I give to my sister Lexie my condominium in Miami, Florida." This is: - ANS A specific devise Marissa's will states, "I give to my sister Katie my condominium in Miami, Florida." This is: - ANS A specific devise Bread & Brews, Inc., files its articles of incorporation with the appropriate government agency. Least likely to appear in the articles is the name of: - ANS Each of the corporation's shareholders Dominic and Eva want to form and do business as a corporation—Farm-2-Fork Restaurant Inc. A corporation is: - ANS An artificial person Most states do not permit the corporate articles or bylaws to authorize compensation for directors. - ANS False Directors cannot use corporate funds or confidential corporate information for personal advantage. - ANS False Merina and Neil form Orchids, Inc. Ultimate responsibility for pol¬icy decisions necessary to the management of corporate affairs rests with Orchids': - ANS Board of directors