1.

1. Which group does not owe the corporation a fiduciary duty a duty to act in the best interests of the corporation, to be loyal to the corporation, to avoid conflicts-of-interest, and to act in an honest and good faith manner?

   	A.	Directors of the corporation.
   	B.	Shareholders of the corporation.
   	C.	Officers of the corporation.
   	D.	Senior management of the corporation.

2.

1. Karl Corp. is a corporation that is bankrupt. It has a number of assets, including inventory, cash, accounts receivable, and office equipment. There are also several classes of individuals who have a claim over Karl Corp.s assets secured creditors, unsecured creditors, preferred shareholders, and common shareholders. Which class possesses the priority claim over Karl Corp.s assets?

   	A.	Common Shareholders.
   	B.	Unsecured Creditors.
   	C.	Preferred Shareholders.
   	D.	Secured Creditors

3.

Mr. Salomon ran a successful shoe manufacturing business. He incorporated Salomon and Co., a corporation in which he owned almost all the shares. Mr. Salomon then sold his shoe manufacturing business to the corporation. Salomon and Co. did not have any money to pay for the business, so Mr. Salomon lends the corporation money and then secured a mortgage over all of Salomon and Co.s assets. Salomon and Co. required supplies to conduct its business, and therefore purchased rubber heals, leather, and shoe-strings on credit from suppliers. A few months later, the business failed due to labour problems. The suppliers sued Mr. Salomon personally to recover amounts owed to them. Mr. Salomon refused to pay. If the suppliers take Mr. Salomon to court, the court will rule for:

	A.	The suppliers, because they are secured creditors, and Salomon and Co. is a secured debtor
	B.	The suppliers, because they are unsecured creditors, and take precedence over Mr. Salomon, who is only a shareholder
	C.	Mr. Salomon, because he is a secured creditor of Salomon and Co., a corporation that is a separate legal entity
	D.	Mr. Salomon, because he secured a mortgage over his own assets

4.

Prince Edward Island is a jurisdiction that uses the __________model of incorporation.

	A.	Articles of Association.
	B.	Articles of Incorporation.
	C.	Letters Patent.
	D.	Memorandum of Association.

5.

Lana Corp. ran a computer business. Lana was the sole shareholder, manager, director, and officer of Lana Corp. Lana Corp. required a loan for its business. Lana, in her capacity as a corporate principal, sought a loan from the Bank of Nova Scotia. The Bank of Nova Scotia examined Lana Corp.s financial records and asked Lana for a personal guarantee in the amount of $10,000. Lana signed the personal guarantee. A few months later her computer business faltered and the Bank of Nova Scotia sought to recover the full amount of $10,000 plus interest. The Bank of Nova Scotia sued Lana in court to recover the amount. The court will find for:

	A.	Lana, because the Bank signed the loan agreement with Lana Corp., and not with Lana
	B.	The Bank of Nova Scotia, because when Lana signed the personal guarantee, she effectively eliminated the advantage of limited liability
	C.	Lana, because Lana Corp. is a distinct legal entity and as such Lana enjoys limited liability
	D.	The Bank of Nova Scotia, but only if Lana signed the personal guarantee in her capacity as a majority shareholder