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Exam 2 Review Flashcards | StudBud
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Exam 2 Review
Exam 2 Review
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1
What is a delegation?
transfer of contractual rights
Congress's ability to create agencies
transfer of contractual duties
what project managers do
2
Partners in all types of partnerships have unlimited liability
False
True
3
A contract that deals with the sale of goods worth $1000 does not have to be in writing
False
True
4
How is an LLC formed?
filing an LLC Certificate
filing Articles of Incorporation
filing Articles of Organization
filing in the United States
5
What are partners liable for in a general partnership?
individual actions
only the assets they invested
they're not liable
actions of all partners
6
What is a Ponzi scheme?
fraudulent operation that pay returns from new capital not investments
fraudulent operation that pays out from legitimate investments
fraudulent investment operations that steal money instead of invest
fraudulent investment operations that pays out from legitimate investments
7
What is the scienter requirement under the 1934 Act?
was conspicuously reckless with the truth or falsity of statements
the violator had intent to defraud or knowledge of the misconduct
the defendant made false statements
wrongfully failed to disclose material facts
8
What is the acronym for Statute of Frauds
MYLEGS
YLMEGS
MLEYGS
SGELYM
9
How do you start a sole proprietorship?
create a certificate
start doin business
don't
file with the secretary of state
10
offeror promises something in return for the offeree's performance only
unilateral contract
acceptance
bilateral contract
chicken
11
What was the Securities Act of 1933 designed to do?
Stabilize the securities industry
All of the above
Provide investors with financial and significant information
Prohibit various forms of fraud
12
proposal that expresses willingness of the offeror to enter into a legally binding agreement
contract
offer
bankruptcy
acceptance
13
An offer is valid when received, but an acceptance is valid when sent
Email rule
Agreement
Exception
Mailbox rule
14
When is delegation not allowed?
when special trust is placed on the obligor
All of the above
when performance depends on personal skills/talents
when the contract prohibits it
15
How are corporations formed?
filing Articles of Organization
filing Articles of Corporation
filing Articles of Incorporation
filing Articles of Corpus
16
What are the management styles of an LLC?
owner-managed or manager-managed
members or officers
owners or managers
Member-managed or manager-managed
17
What is a requirement to be a well-known seasoned issuers?
Outstanding stock valued at $500 million+ in the public
At least $1 billion in securities in the last 3 years
Outstanding stock valued at $700 million+ in the public
At least $10 billion in securities in the last 4 years
18
When a sole proprietor dies, the business
is just a business
is given to the bank
is given to next of kin
dies
19
Why are certain types of securities exempt?
Because they are regulated by other statutes
Because they can be resold without being registered
Because they are low-risk investments
Because they maintain their exempt status forever
20
What is the only term required in UCC contracts?
Price
Quantity
None of the above
Delivery
21
A corporation is a legal entity separate from its owners.
False
True
22
Courts can pierce the corporate veil in certain situations. Which is NOT a situation?
criminal actions not related to the corporation
Alter-ego theory
Commingling corporate assets with personal assets
improper formation or purpose
23
Define Statute of Frauds
Contracts that are required in writing
Any type of contract
Avoid a fraudulent contract
Contracts that create fraud
24
What is a quorum?
a specific number of people required to act in a meeting
a select group for a corporate meeting
a certain majority to make decisions
a meeting of shareholders
25
response by offeree, with new terms, which rejects the original offer
revocation
counteroffer
offeree
firm offer
26
What is an advantage of a LP
unlimited liability
limited liability
pass-through tax
hard to raise capital
27
What law governs franchising?
Criminal law
Civil law
Contract law
UCC law
28
What are remedies to a violation of the 1933 Act?
All of the above
Civil sanctions
fines of up to $10,000
Imprisonment for up to 5 years
29
What is the term used to describe the end of a partnership?
termination
wind up
dissolution
disassociation
30
What does the Securities Exchange Act of 1934 govern?
Brokers and dealers
All of the above
Securities exchanges
National securities associations
31
affirmative response necessary to transform an offer into a contract
air
acceptance
offeror
option
32
What three classifications of people do not have capacity
Minors, intoxicated, mentally ill
Short, blue-eyed, mentally ill
Minors, unconscious, mental
Red-haired, intoxicated, mentally ill
33
What is the main goal of the Sarbanes-Oxley Act?
increase corporate accountability through requirements and penalties
Expand SEC power
Establish private civil actions
Regulate accounting firms
34
What are the penalties for violating the 1934 Act?
imprisonment for 25 years
imprisonment for 20 years
all of the above
fine of up to $5 million or $25 million
35
A sole proprietorship can raise capital by
Taking out personal loans
Shares
Using personal assets
Stocks
36
What must issuing corporations provide file with the SEC?
Issuing statement
Required statement
Statement of intent
Registration statement
37
What is an advantage of a partnership
pass-through tax
split management
unlimited liability
hard to raise capital
38
How can a franchise be terminated?
For any reason
None of the above
Only for a good cause
"For cause" defined by the contract
39
legal test used by juror or judges to determine whether the offeror has show intent to contract
acceptance
test of a reasonable person
offer
option
40
What is the rule that governs insider trading?
SEC Rule 10b-5
SEC Rule 10b-4
SEC Rule 10a-4
SEC Rule 10a-5
41
What are the characteristics of corporations involved with the Securities Exchange Act of 1934?
All of the above
500+ shareholders
Those issuing securities
Assets in excess of $10 million
42
What is an advantage of a sole proprietorship?
income tax
hard to raise capital
easiest to form
unlimited liability
43
What type of liability do members have in an LLC?
full
only to the extent of their management
limited
unlimited
44
Who owns a corporation, who governs a corporation, who manages a corporation
shareholders, directors, managers
members, board of directors, managers
members, directors, officers
Shareholders, board of directors, officers
45
What are the elements of a contract
agreement, consideration, capacity, legality
agreement, consideration, ability, legality
agreement, exchange, capacity, legality
acceptance, consideration, capacity, legality
46
How is an LLC taxed?
double taxed
pass-through
income tax
Pass-through, unless stated otherwise
47
Consideration is an exchange of something of equal value
True
False
48
requirement that the terms in an acceptance exactly match the term in the offer
test of a reasonable person
contract
mirror image rule
offeror
49
How are partnerships taxed?
pass-through tax
no tax
income tax
double tax
50
What are the defenses to the enforceability of contracts?
Duress, influence, undue mistake, misrepresentation
Duress, unilateral mistake, influence, misrepresentation
Undue duress, influence, mistake, misrepresentation
Duress, undue influence, mistake, misrepresentation
51
What is a franchise?
an agreement to allow someone to run your business
an agreement to sell a business to someone else
an agreement to allow someone else to sell a business's goods or services
an agreement to own a business together
52
What are the defenses to a violation of the 1933 Act?
The plaintiff knew about the misrep when the stock was purchased
The statement or omission was not material
The defendant exercised due diligence and reasonably believed it was true
All of the above
53
What is an advantage of a corporation?
easy to raise capital
double taxation
management levels
limited liability
54
What are the two theories related to outsiders involved in insider trading?
Tipper/tippee theory; misappropriation theory
Tipper/tippee theory; misrepresentation theory
Tipster theory; misrepresentation theory
Tipster theory; misappropriation theory
55
offeror's act that invalidates an offer
revocation
acceptance
mirror image rule
bilateral contract
56
What type of partner participates in the management of an LP
limited partner
general partner
managing partner
partner
57
How do you form an LP?
file Articles of Organization
file a certificate
file Articles of Incorporation
file Articles of an LP
58
Binding agreement created by an offer that is accepted by a promise or performance
acceptance
bilateral contract
unilateral contract
firm offer
59
What is an assignment?
something you do for class
transfer of contractual rights
transfer of contract
transfer of contractual duties
60
What does the Securities Act of 1933 govern?
first sale of stock by businesses
secondary sales of stock by businesses
all sales of stock by businesses
initial sales of stock by businesses
61
Why do most board of directors have outside directors?
independent directors tend to closely monitor the actions of officers
independent directors have no formal employment affiliation with the corp
independent directors work harder than internal directors
independent directors provide a fresh perspective
62
What are the different types of franchises?
Manufacturing
Distributorship
All of the above
Chain-style
63
signed writing by a merchant promising to leave an offer open
contract
reasonable person
firm offer
offer
64
What is an advantage of an LLC?
hard to raise capital
pass-through tax
management options
limited liability
65
What does the SEC do?
Change the 1933 and 1934 securities acts regulations
Interpret the laws
Create new laws
Administer and regulate the 1933 and 1934 securities acts
66
What is the term used to describe the process of ending a partnership?
wind up
disassociation
dissolution
termination
