1) By using ________, shareholders may express (vote) their preference without traveling to the site of the annual meeting.

A) a preemptive right

B) a corporate proxy

C) a stock option

D) a stock split

E) a stock dividend

2) A preemptive right is

A) the right of stockholders to acquire a proportional amount of any new issues of common stock.

B) the right of stockholders to fire and replace the board of directors.

C) the right of the corporation to enter into legally binding contracts without the direct approval of the shareholders.

D) the right of stockholders to supersede the actions of top management.

E) the right of top management to act on behalf of the stockholders.

3) Limited liability means

A) that in the event of liquidation, owners need to contribute only enough additional money so as to fully pay off the creditors of a corporation.

B) the creditors of a corporation can receive only up to and no more than the amount due to them.

C) that the company is required to pay only current liabilities in the current year and has no obligation to pay long-term liabilities in the current year.

D) that corporations can have liabilities only up to a certain amount, due to limits on the company's borrowing capability.

E) the creditors of the corporation have claims on only the assets of the corporation and not the assets of the owners of the corporation.

4) Which of the following statements is false?

A) New corporations often start with a few investors and then seek additional funding as their original ideas are shown to be profitable.

B) Groups of investors called venture capitalists provide financial support for new corporations.

C) If the early life of the company is successful, the company may have an initial public offering (IPO).

D) The IPO may be managed by an underwriting firm and shares will be sold to individual and institutional investors.

E) The accounting procedures used by a company will vary significantly based upon the stage of the company's growth cycle.

5) Corporations are perpetual entities created in accordance with federal laws.

True or False

6) A corporate proxy is a written authority granted by individual shareholders to others to cast the shareholders' votes.

True or False

7) The ultimate power to manage a corporation is usually delegated to a corporation's top management by the common stockholders.

True or False

8) Top management does not need to own a significant number of shares in order to have the authority to exert great influence on the actions of a corporation.

True or False

9) In general, what are the principal rights of shareholders?

(1) ___________________

(2) ___________________

(3) ___________________

(4) ___________________

10) The total number of shares that may be issued by a corporation is known as

A) issued shares.

B) authorized shares.

C) outstanding shares.

D) treasury shares.

E) preferred shares.

11) Those shares which have been sold to outside investors at one time or another are known as

A) authorized shares.

B) issued shares.

C) outstanding shares.

D) treasury shares.

E) convertible shares.

12) Those shares which have been issued and that are still in the hands of shareholders are known as

A) authorized shares.

B) issued shares.

C) treasury shares.

D) outstanding shares.

E) convertible shares.