Law/531 Final Examination Study Guide
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
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