1. Who has the responsibility for all policy-making decisions necessary to the management of all corporate affairs?

A. Board of Directors

B. Only the Chairman of the Board

C. Corporate Officers

D. Shareholders

2. The minimum number of directors in California with three shareholders or more is

A. 3

B. 1

C. 2

D. 4

3. An inside director is

A. Is an officer of the corporation who is also a director.

B. Is one who does not hold a management position with the corporation but is a director

C. Is a officer of a rival corporation who is a director.

D. Is a shareholder of the corporation who is also a director.

4. The right to participation means that corporate officers are entitled to participate in all board of directors' meetings and have a right to be notified of these meetings.

A. True

B. False

5. Shareholders elect the corporate officers.

A. True

B. False

6. The Board of Directors elect the corporate officers.

A. True

B. False

7. Which of the following is NOT true regarding a Directors exercise of due care in performing their duties?

A. Never take action against the best interests of the employer

B. Exercise the care that an oridnarily prudent person would exercise in similar circumstances

C. Act in good faith

D. Do what she or he believes is in the best interest of the corporation

8. The business judgment rule will

A. Allow a corporate shareholder to make a good faith business judgment in the management of the corporation

B. Will hold a corporate officer liable for a bad business decision

C. Protect a corporate officer from liability for a honest mistake of judgment

D. Will hold a corporate director liable for a bad business decision

9. The fiduciary duty of loyalty applies to

A. Corporate Directors

B. Corporate Officers

C. Corporate Officers and Directors

D. Shareholders

10. The purpose of cumulative voting is

A. Allow majority and minority shareholders to equally vote for the board of directors

B. To allow minority shareholders to be represented on the board of directors

C. None of these

D. To all majority shareholders to be able to elect all of the directors