26.The Business Judgment Rule

a.is an obsolete 19^th Century corporate legal principle.

b.protects corporate directors from liability.

c.does not apply to directors of close corporations.

d.requires the application of hindsight to decisions made by corporate directors.

27.Bill signed a promissory note for $10,000 to Mary in payment of 1,000 boxes of girl scout cookies. Mary negotiated the note to Sally, a holder in due course, for $9,000. Sally comes to Bill to collect on his note. What defenses are NOT successful against Sally, the HDC?

a.The defense that the cookies were never delivered.

b.Fraud in the inducement.

c. Fraud in the execution.

d.a. and b.

28.Which of the following ways do you convert a bearer negotiable instrument to an order negotiable instrument?

a.Indorse without recourse and sign the indorsement.

b.Indorse with Pay to Lester Moore and sign the instrument.

c.Indorse with signature only.

d.None of the above.

29.Failure to perfect a security interest in an item of collateral leads to the following groups having priority over the unperfected party.

a.Buyers in the ordinary course of business

b.Judgment lien creditors.

c.Creditors with a perfected security interest.

d.All of the above.