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Chapter Quiz
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1
A corporation taking a particular action that exceeds its stated powers may be voided by a shareholder.
A)True
B)False
2
Although the board of directors of a corporation must primarily focus on the interests of shareholders, it may also take into account the interests of other constituencies that affect the corporation profits over the long term.
A)True
B)False
3
Directors have the right to inspect corporate books and records provided that they do it consistent with their role in the corporation.
A)True
B)False
4
Directors may only be removed for cause.
A)True
B)False
5
Officers of a corporation are elected by shareholders at the annual shareholders meeting.
A)True
B)False
6
Officers and directors are fiduciaries to the corporation.
A)True
B)False
7
The board of directors:
A)may delegate certain tasks to committees of the board.
B)usually are involved in the day-to-day operation of the board.
C)must own shares in the corporation.
D)have personal liability for contracts and torts of the corporation.
8
The business judgment rule:
A)will protect officers and directors from liability even if they engage in fraudulent activity.
B)states that an officer or director are relieved of liability to the shareholders if they make an informed decision, act with no conflicts of interest, and have some rational basis for believing that the decision is in the best interest of the corporation.
C)provides relatively little protection for officers and directors.
D)allows the courts to second-guess the decisions of the board of directors and make their own decision as to the reasonableness of a board's decision.
9
A board member or an officer will be deemed to have usurped a corporate opportunity:
A)if he receives the opportunity while acting in his corporate capacity.
B)if the opportunity is related or connected to an existing or prospective corporate activity.
C)if the corporation was fiscally able to seize advantage of the opportunity.
D)All of the above
10
A director or officer's actions will not be voided on conflict of interest grounds if:
A)The transaction has been approved by the majority of informed, disinterested directors.
B)The transaction has been approved by a majority of the shares held by informed, disinterested shareholders.
C)The transaction is fair to the corporation.
D)Any of the above





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