Question 1

Rocco is a director of Spa Lids & Tubs, Inc.Under the standard of due care owed by directors of a corporation, Rocco's decisions must be

Accepted Answer

The standard of due care requires directors to make informed and reasonable decisions based on all available information. Directors are not expected to make perfect or infallible decisions, but rather to exercise reasonable judgment and care in fulfilling their duties. While decisions may be questioned or subject to disagreement, they should generally be defensible based on the information available at the time.

Question 2

Heidi and Ian are directors and shareholders of Globe Software, Inc.Heidi's written authorization to Ian to vote Heidi's shares at a Globe shareholders' meeting is

Accepted Answer

Heidi has given Ian a proxy, which is a written authorization to vote her shares at the Globe shareholders' meeting. This is a common practice in corporations and is not a violation of the duty of loyalty. A stock certificate is a document that certifies ownership of shares, and a quorum is the minimum number of shareholders required to conduct business at a meeting.

Question 3

Naomi and Ogden are shareholders of MediCare Residences, Inc.As shareholders, they must approve

Accepted Answer

Shareholders typically have the power to approve or reject the decision to conduct a merger. This is a major decision that can impact the company's financial standing and future direction, and as such would require the approval of the shareholders. The other options, such as pursuing new business opportunities, terminating a managerial employee, or negotiating a contract between management and labor, are typically within the purview of management and do not require shareholder approval unless specified in the company's bylaws.

Question 4

Ricardo is a shareholder of Speedy Bikes Company (SBC).When the directors fail to undertake an action to redress a wrong suffered by SBC, Ricardo files a suit on the firm's behalf.Any damages recovered by Ricardo's suit will normally go to

Accepted Answer

Ricardo filed the suit on behalf of SBC, therefore any damages recovered should go to SBC, the company that suffered the wrong. It would be unethical and illegal for Ricardo to keep the damages for himself.

Question 5

Orin is a shareholder of Pinkwater Corporation.In some states, Orin might incur personal liability for Pinkwater obligations if he

Accepted Answer

The answer of Orin is a shareholder of Pinkwater Corporation.In...

Question 6

Starr Cardio, Inc., is a small business.Ted, Uma, and eleven other members of the Starr family own all of its stock.Currently, Starr's income is taxed at the corporate level and, after being distributed to the family members, at the shareholder level.Can Starr retain its corporate status but otherwise avoid this double taxation? If so, how?

Accepted Answer

The answer of Starr Cardio, Inc., is a small business.Ted,...

Question 7

Urban Commerce, Inc., issues bonds, which are also known as

Accepted Answer

Bonds are fixed-income securities, as they provide a fixed return to investors in the form of interest payments. The other options (A, C, and D) are not accurate descriptions of bonds.

Question 8

Zero Sum Games Corporation has forty-three shareholders.The minimum number that must be present at a meeting for a shareholders' vote is

Accepted Answer

A quorum is the minimum number of shareholders that must be present at a meeting in order for business to be conducted. The specific number required for a quorum can be determined by the corporation's bylaws. It is unlikely that a corporation would require all shareholders to be present for every meeting, as this would be impractical and difficult to coordinate. Similarly, a proxy allows a shareholder to designate someone else to vote on their behalf, but it does not determine the number of shareholders required for a quorum. While three shareholders may be sufficient for some decisions, it is unlikely to be the minimum number required for a vote by all shareholders.

Question 9

Officers and employees of Apples Corporation and Oranges Corporation are convicted of conspiring to violate a federal law that is punishable by a term of imprisonment and a fine.Can Apples and Oranges be held liable for these crimes? If so, how can they be punished?

Accepted Answer

The answer of Officers and employees of Apples Corporation and...

Question 10

Gladys is a shareholder of Frozen Yogurt, Inc.As a shareholder, Gladys must approve

Accepted Answer

The answer of Gladys is a shareholder of Frozen Yogurt,...

Question 11

Odell is a director of Price Rite, Inc.As a director, with respect to the corporation, Odell is

Accepted Answer

Directors of a corporation owe fiduciary duties to the corporation and its shareholders, including duties of care, loyalty, and good faith. Therefore, Odell is a fiduciary. Forum refers to the place or platform where a meeting or discussion takes place, proxy refers to a person authorized to act on behalf of another, and quorum refers to the minimum number of members required to conduct business at a meeting. While these terms may be relevant in the context of a board of directors meeting, they do not accurately describe the role of a director in relation to the corporation.

Question 12

Genna is a director of Fab Stuff Corporation.Without informing Fab, Genna starts up Evertrendy, Inc., to compete with Fab.Genna is liable for breach of

Accepted Answer

Genna, as a director of Fab Stuff Corporation, owes a fiduciary duty of loyalty to the company. This duty includes refraining from competing with the corporation without its consent. Therefore, by starting up a competing business without informing Fab, Genna is in breach of her duty of loyalty.

Quiz 15: Corporations