Question 1

Interstate Paving & Surfacing,Inc.,issues bonds. Bonds

Accepted Answer

Bonds are referred to as fixed-income securities because they provide regular interest payments to investors.

Question 2

Vincento buys 500 shares of common stock in Water Reclamation & Conservation Services,Inc. As a shareholder of record,Vincento owns a proportionate interest with regard to Water Reclamation's

Accepted Answer

As a shareholder, Vincento owns a proportionate interest in all aspects of the company, including its net assets, control, and earnings. Therefore, all of the choices are correct.

Question 3

Music Makers Inc. has a stated purpose to sell musical instruments. If chief executive officer Ned contracts with Open Carry Firearms in Music's name to sell a shotgun,he has likely committed

Accepted Answer

Music Makers Inc. has a stated purpose to sell musical instruments, and selling a shotgun is not related to their stated purpose. Therefore, the act of contracting with Open Carry Firearms to sell a shotgun is an ultra vires act, which means it is beyond the powers of the corporation.

Question 4

Rob owns Solar Fuel Corporation. Rob uses Solar Fuel's funds to pay his personal expenses,creates Thermal Power Inc. to engage in the same business as Solar Fuel,transfers Solar Fuel's assets to Thermal Power,and petitions Solar Fuel into bankruptcy. This most likely warrants

Accepted Answer

This scenario suggests that Rob has committed fraud by using Solar Fuel's assets for personal expenses, creating a new company to engage in the same business, and transferring Solar Fuel's assets to the new company. By petitioning Solar Fuel into bankruptcy, Rob is essentially abandoning the company and leaving its creditors with no recourse for repayment. This warrants a pierce of the corporate veil, meaning that Rob will be held personally liable for the company's debts and obligations. A bonus or discharge is not appropriate in this situation, and reviewing Thermal Power's articles of incorporation alone would not address the fraudulent actions of Rob.

Question 5

PrimarySource.com Corporation is a new online,textbook,and school supply business. How can PrimarySource.com obtain capital to finance its operations?

Accepted Answer

The answer of PrimarySource.com Corporation is a new online,textbook,and school...

Question 6

Sierra is a holder of preferred stock in Rio Grande Irrigation & Development,Inc. Sierra has priority over holders of Rio common stock as to

Accepted Answer

Preferred stockholders typically have priority over common stockholders when it comes to payments of dividends. The other options listed are not typical rights or privileges of preferred stockholders.

Question 7

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

Accepted Answer

As holders of common stock, Blair and Chanel have a residual position in the overall financial structure of Discount Retail Stores, Inc. This means they are the last to receive returns for their investment after all other stakeholders, such as bondholders and preferred stockholders, have been paid. They are not guaranteed to receive more than the amount of their investment, they do not have priority to the firm's assets if it becomes insolvent, and their state of residence is not a factor in their position as stockholders.

Question 8

Wings2Go Corporation fails to hold an organizational meeting. In this circumstance,Wings2Go is most likely

Accepted Answer

A de facto corporation is one that has not fully complied with the requirements of incorporation, but is still considered a legal corporation because it has made a good faith effort to comply and has acted as a corporation in good faith. In this case, because Wings2Go has not held an organizational meeting, it has not completed all the necessary steps for incorporation, but it is still acting as a corporation.

Question 9

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

Accepted Answer

EZ Hauling would be considered a corporation by estoppel because it has represented itself as a corporation to others, even though it has not gone through the formal process of incorporation. This legal principle prevents the business from denying its corporate status to third parties who have dealt with it under the assumption it was a corporation.

Question 10

Agents and employees of Deco Arts Corporation and Echo Imitations Inc. are convicted of conspiring to violate a federal law that is punishable by a term of imprisonment and a fine. Can the corporations be held liable for these crimes? If so,how can they be punished?

Accepted Answer

The answer of Agents and employees of Deco Arts Corporation...

Question 11

Hollywood Lights,Inc. substantially complies with all conditions precedent to incorporation. Hollywood is most likely

Accepted Answer

Since Hollywood Lights, Inc. has substantially complied with all conditions precedent to incorporation, it is considered a de jure corporation. This means that it is a legally recognized corporation with all the rights and privileges of a corporation.

Question 12

Techno Talent & Personnel,Inc.,is a corporation. Techno Talent's implied powers enable it to

Accepted Answer

Implied powers are those powers not expressly granted to a corporation but necessary to carry out its express powers. One of Techno Talent's express powers is to borrow and lend funds, so it has the implied power to do so. The other options are incorrect because departing from traditional corporate formalities may violate laws or the corporation's own bylaws, binding the corporation to an action that greatly affects its purpose requires approval from the board of directors or shareholders, and implied powers do not give a corporation free reign to do anything outside the scope of its express powers.

Quiz 33: Corporate Formation and Financing