Strayer Legal 100 Quiz 11 week 11

| August 31, 2016


Course Business Law I

Test Week 11 Quiz

Instructions This quiz consist of 20 multiple choice questions. The first 10 questions cover the material in Chapter 14. The second 10 questions cover the material in Chapter 15. Be sure you are in the correct Chapter when you take the quiz.

Question 1

Brice is on the board of Success Corporation. Eager Corporation has made a move to acquire Success. Tina, the president of Success advises the board that the offer made by Eager is a good one that should be accepted. She did not disclose, however, that Eager had offered her a generous bonus if she could convince the board members of Success to take Eager’s offer. Brice tells the other board members that they should simply rely on Tina because she is probably right, and under the business judgment rule they are protected even if she is wrong. Which of the following is true regarding Brice’s advice?

Question 2

In a ________, someone wishing to replace the board with his or her own candidates must acquire a sufficient number of shareholder votes to do so.

Question 3

The duty of ________ requires officers to exercise reasonable supervision over the business affairs of the corporation.

Question 4

What is a no-shop agreement?

Question 5

Which of the following is true regarding statements of officers?

Question 6

Traditionally, a transaction benefiting a director’s self interest is ________ unless the director could show it was fair and reasonable to the corporation.

Question 7

The ________ requires that officers and directors not take personal advantage of a desirable business investment that rightfully belongs to the corporation.

Question 8

Which state has the nation’s toughest state antitakeover statute?

Question 9

Directors are always ________ of the corporation.

Question 10

What was the result in Smith v. Van Gorkom, the case in the text in which it was alleged that directors were grossly negligent in failing to inform themselves adequately before making a decision about a merger?

Question 11

Lawsuits under Section 10(b) must be brought within ________ of the date the plaintiff discovered or should have discovered the fraud or within ________ of the date of the violation, whichever is earlier.

Question 12

Which of the following is not a requirement for a Rule 10b-5 violation?

Question 13

If a purchase or sale by an officer, director, or greater-than-10 percent shareholder that would otherwise result in recoverable short-swing profits was involuntary and did not involve the payment of cash and if there was no possibility of speculative abuse of inside information, than a court may hold that it was a(n) ________ to which no liability will attach.

Question 14

Section 20(a) imposes ________ liability on every person who, directly or indirectly, controls any person liable under the 1934 Act, unless the controlling person acted in good faith and did not directly or indirectly induce the acts constituting the violation.

Question 15

Sampson works as an accountant for ABC Accounting and was auditing XYZ Company. Delilah, the president of XYZ Company, told Sampson that she really needed to keep her job and that if the true condition of the company were exposed, she would certainly be fired. She tells Barry that she is sure she can turn things around if he will only look help her our in the audit report. Sampson, who was infatuated with Delilah, agreed to include inaccurate umbers in the company’s audit report which would be included in the company’s annual report on Form10-K filed with the SEC. Unfortunately, Delilah was not able to turn the company’s performance around, and it went into bankruptcy later that year. Sampson becomes aware that an investigation is being conducted. Which of the following is true regarding his potential liability?

Question 16

Before signing a written consent allowing their audited report to be included in a registration statement, accountants should do a(n) ________.

Question 17

The requirement that the defendant in a 10b-5 action have used interstate commerce, the mails, or a national securities exchange gives Congress the power to regulate the defendant’s conduct under ________.

Question 18

How are criminal prosecutions of illegal insider trades brought?

Question 19

Section 16(a) of the 1934 Act requires that officers, directors, and greater-than-10 percent shareholders of companies that have registered any class of equity securities under the 1934 Act file ________ reports with the SEC.

Question 20

Under the ________ theory, a person who lacks a fiduciary duty to a company may nonetheless violate Rule 10b-5 by trading on nonpublic information in the company’s stock.

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