quiz business law

business law

Question 13 pts

1. ABC corporation is chartered under the corporation laws of the state of Virginia. ABC also does business in Maryland and DC. As to Virginia ABC is a:

limited corporation

foreign corporation

domestic corporation

alien corporation

Question 21 pts

2. We studied the Kenny Shoe case to learn about insider trading?



Question 31 pts

3. The US Supreme Court upheld the conviction of the Wall street printer, Mr. Chiarella, for being guilty of “insider trading”



Question 41 pts

4. Corporate Officers and directors owe the corporation a duty of loyalty not to seize a corporate opportunity for themselves.



Question 51 pts

5. In a lawsuit by creditors of a corporation the creditors will be able to recover what is owed them from the Officers and Directors if the creditors can show the corporation failed to be run according to the formality required by the By Laws of the corporation?



Question 62 pts

6. When serving as an officer or director of a public for profit corporation, in order to avoid liability to shareholders for losses the corporation may have sustained, the officers and directors must show they used:

acted fairly

not at the meetings

They are never liable

good business judgement

Question 72 pts

7. In our readings which case dealt with insider trading and a tipee ?

Kenny shoe

NY Times

Readers Digest


Question 83 pts

8. John is a member of the board of directors of the Shifty Corporation and has been asked to sign off on the K-1 report to be submitted to the Securities and Exchange Commission. The report is a prospectus of Shifty’s financial status to induce stock traders to buy their shares of stock. John is not sure the K-1 report is accurate and comes to you for advice on what to do. What case would you point out to John that found if directors were on a board that provided false information they would be in violation of the securities laws and subject to criminal prosecution.

US v Johnson


Kinny Shoe


Question 93 pts

9. Joe and Ann and their three daughters are the shareholder, directors and officers of their family owned restaurant the Top Class cafe incorporated. They formed their corporation to avoid liability for any corporation business debts. Both Joe and Ann worked in the restaurant full time and the daughters worked every weekend. At the end of the week, Joe would see how much they made in sales and then he would give the girls cash payments and then he and Ann would take the rest after paying taxes. They had not held any shareholders or directors meetings but said, hey this is a family business and we trust one another and don’t need all that formality. After three years the business was now in serious debt and could not make payments on the rent, food vendors and other creditors and decided to close. The creditors sued Top Class for unpaid bills and after learning how they ran the business asked the court to make Joe and Ann and the girls personally liable. To do this the creditors would ask the court to:

seek a summary judgement

pierce the corporate veil

remove the corporate charter

seek a special sale

Question 101 pts

10. The reason the Securities Exchange laws do not apply to a closely held corporation is that they do not want the public to by their shares of stock.



Question 112 pts

11. The purpose behind the Securities and Exchange Law and the development of the Securities and Exchange Commission is to protect the investing public that they are assured the information upon which they may decide to buy stock is truthful and accurate.



Question 122 pts

12. As a director of a public for profit corporation you sign the K-1 prospectus and you know that the the Officers and major directors are submitting fraudulent information to the Security and Exchange Commission to induce stock purchases, since you have nothing to do with the wrong information, the SEC will not prosecute you, only those who mde up the wrong information?



Question 133 pts

13. The case in the readings we studied to help understand when the “good business judgement rule” applies and showed in that case the Officers and directors were not protected for their actions by the good business judgement rule was the :

Smith Van Gorkum case

The Chiraella case

The Kenny Shoe case

The amazon case