Law/531 Final Examination Study Guide

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1.What makes a publicly held corporation different from a public corporation? a.0 A publicly held corporation has had an IPO, and has many private shareholders rather than being a corporation owned by a governmental entity. b.0 A publicly held corporation is entitled to limited liability, but the public corporation is not. c.0 A publicly held corporation must have a charitable purpose, but a public corporation need not have a charitable purpose d.0 They are two terms that have the same meaning.

2.If a corporation is properly incorporated in one state and wants to do business in a second state, the corporation a.0 must incorporate in the second state
b.0 must do nothing because being incorporated in one state entitles the corporation to do business in all states c.0 register with the Interstate Corporation Commission
d.0 may be required to obtain a certificate of authority from the second state

3.Limited partners can lose their limited liability by
a.0 investing too much in the partnership
b.0 withdrawing from a limited partnership contrary to provisions in the limited partnership agreement c.0 actively managing the business of the limited partnership d.0 breaching the fiduciary duty to the limited partnership

4.The major disadvantage of a sole proprietorship is
a.0 the difficulty and cost of formation
b.0 the unlimited liability for the business’ debts
c.0 the sharing of management authority with others
d.0 the difficulty in transferring ownership to others

5.ABC Corp. buys all of the stock of XYZ Corp., a publicly traded company, in a tender offer. Which of the following is true about the liabilities of XYZ Corp.? a.0 Because XYZ Corp. was publicly traded at the time of its sale, its liabilities are extinguished by the sale of its stock. b.0 The stockholders of XYZ Corp. remain liable for the liabilities of XYZ Corp. after the sale of the company to ABC. Corp. c.0 Because this is a stock deal of a public company, all of the liabilities of XYZ Corp. are acquired by ABC Corp., in connection with the acquisition of the stock. d.0 The officers and directors of XYZ Corp. remain liable for the liabilities of XYZ Corp. after the transaction.

Objective: Differentiate among non-judicial methods of alternative dispute resolution.

6.What are the characteristics of mediation?
a.0 The mediator hears the evidence presented by the parties, and then decides how the problem should be resolved. b.0 Mediation is final, binding, and nonappealable.
c.0 The mediator must have a stake in the dispute.
d.0 Mediation facilitates the parties in developing a mutually agreeable resolution.

Week Two: Torts

Objective: Identify potential tort risks that arise in the business context.

7.Under federal rules regulating food and drugs, which of the following is true? a.0 Food must be pure 100% before it can be sold to consumers. b.0 Food may contain certain impurities, such as insect parts, as long as it is not adulterated. c.0 If a food contains impurities, such as insect parts, these impurities must be disclosed on the food label. d.0 All food must be inspected by the government before it is sold.

Objective: Apply the risk management process to mitigate business risk.

8.To protect the interests of shareholders and investors, the Sarbanes-Oxley Act provides for the establishment of the _____________ to oversee audits of public companies. a.0 Corporate Audit Committee

b.0 Internal Auditing Investigation Board
c.0 Accounting Inspection Committee
d.0 Public Company Accounting Oversight Board

Objective: Differentiate between types of torts.

9.Based on the law of product liability, which of the following is correct? a.0 A manufacturer should design its products to take into account foreseeable misuse. b.0 A manufacturer should design its products to take into account all possible misuse. c.0 A manufacturer should design its products to take into account all...
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