1. A _______ is a public offer to all the shareholders of a target corporation to buy their shares at a stated price, usually _______ the market price.

A. tender offer; higher than

B. leveraged buyout; higher than

C. tender offer; below

D. leveraged buyout; below

2. A bank's _______ rate is the lowest published rate of interest at which the bank lends to its best and most creditworthy commercial customers.

A. lien

B. term

C. prime

D. secured

3. A(n) _______ is defined under the 1933 Act as any person who has purchased from an issuer with a view to, or offers or sells for an issuer in connection with, the distribution of any security.

A. investment banker

B. underwriter

C. dealer

D. secondary seller

4. A state law that limits the maximum rate of interest that may be charged is called a(n) _______ law.

A. interest

B. usury

C. rate

D. term

5. Which of the following is TRUE regarding incorporation?

A. A corporation must be incorporated in the state in which it has its principal place of business.

B. Laws regarding incorporation and the rights and duties of corporations are uniform from state to state.

C. Since the mid-1930s, Delaware has been considered the preeminent state for incorporation.

D. Incorporation may be done pursuant to common law as well as statute.

6. What is the primary purpose of debt subordination?

A. to cap homestead exemptions in limited circumstances

B. to prevent intentional infliction of emotional distress on a borrower by bank officials

C. to protect the senior creditor in the event the debtor becomes insolvent

D. to make the guarantor's assets unavailable to its creditors

7. Which of the following refers to a merger in which some shareholders are required to surrender their shares in the disappearing corporation in exchange for cash?

A. illegal merger

B. termination merger

C. surrender consolidation

D. freeze-out merger

8. Which of the following is NOT a requirement for a Rule 10b-5 violation?

A. The defendant either used the mails, an instrumentality of interstate commerce, or a facility of a national securities exchange.

B. The defendant made a statement that either misrepresented or omitted a fact of material importance.

C. The misrepresentation or omission was made with scienter.

D. The statement was made in connection with a public offering.

9. Which of the following is TRUE regarding breakup fees?

A. They are sometimes characterized as liquidated damages.

B. The Securities and Exchange Commission prohibits the payment of breakup fees.

C. Breakup fees are typically 20-25 percent of the value of the deal.

D. They are sometimes characterized as liquidated damages, and breakup fees are typically 20-25 percent of the value of the deal.

10. _______ is the simplest and most prevalent form of business enterprise in the United States.

A. S corporation

B. Partnership

C. Sole proprietorship

D. Joint venture

11. In a shareholder rights plan, any takeover not approved by the directors makes the process prohibitively expensive. This protection of shareholder interests is known as a:

A. termination fee

B. poison pill

C. freeze out

D. constructive trust

12. Requirements that must be met under the loan agreement before the lender's obligations arise are known as ______.

A. conditions precedent

B. conditions concurrent

C. conditions subsequent

D. loan qualifiers

13. ______ refers to a method by which courts hold shareholders individually liable for claims against a corporation.

A. Reverse liability

B. Piercing the corporate veil

C. Upholding the ethical theory

D. Unveiling

14. In a _______, someone wishing to replace the board with his or her own candidate attempts to acquire a sufficient number of shareholder votes to do so through limited written powers of attorney entitling the holder to vote the shares owned by the person giving the power of attorney.

A. hostile takeover

B. proxy contest

C. poison pill

D. greenmail takeover