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Multiple Choice Quiz
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1
What determines the actions that a member-managed LLC will be bound by?
A)The LLC statute only.
B)The operating agreement only.
C)Either the LLC statute or the operating agreement.
D)Only a majority vote of the members.
2
When do shareholders have the right to share in dividends?
A)When declared by the board of directors.
B)When funded by the board of directors.
C)In any fiscal year in which there is a surplus.
D)In any fiscal year in which the shareholders vote to have a dividend.
3
Under recent rules, a corporate director who finds a legal violation by her corporation must _____.
A)only notify the local police
B)not engage in a cover-up
C)not ask or tell about related wrongdoing
D)allow the activity to continue in order to catch all guilty parties
4
Under insider trading rules, the following person would not be considered an "insider":
A)Administrative assistants to executives.
B)Major shareholders who are not corporate officers.
C)Researchers at corporate labs not at company headquarters.
D)Cleaning staff that wash windows at company headquarters.
5
The duty of due diligence requires the same level of care as that of a _____.
A)ordinarily prudent person in a comparable situation
B)skilled professional
C)person with a MBA degree
D)ordinary person who might work for a comparable company
6
John buys 500 shares of Matrix Corp. stock from Henrietta. Matrix refuses to transfer the stock to reflect Henrietta as a shareholder of record since she is the CEO of a Matrix competitor. Henrietta may _____.
A)bring a derivative suit
B)only ask John to sue on her behalf
C)bring a direct suit
D)not sue
7
Shareholder Adams is angry that XYZ Co. management refuses to provide Adams with XYZ product samples to give as Christmas gifts. Adams wants to present this as a shareholder proposal. XYZ managers _____.
A)must include this proposal
B)may reject this proposal
C)may request that Adams to first have other shareholders sign a petition
D)may request that Adams to first demonstrate at least a ten percent support of the proposal by voting shareholders
8
The actual document that Sarah will use to ask Alex for his voting right is called a _____.
A)proxy
B)proxy solicitation
C)proxy request
D)proxy contract
9
Samantha is a director of ABC Corp. Samantha _____.
A)may not be an officer
B)may not be a shareholder
C)may be an officer and a shareholder
D)must request SEC approval to be an officer or a shareholder
10
If Jozelle wants to resign from the board of Alpha Corporation, she must, in many states, _____.
A)send a typed resignation to the corporation
B)send a handwritten resignation to the corporation
C)send a resignation to the corporation in any reasonable manner
D)send a resignation to the corporation and to the SEC





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