A corporation must obtain shareholder approval before the company expands into international markets. 2 sells off a major portion of the business to another company. hires or fires a significant number of employees. opens additional offices. Question 15 Management's duty to have a rational business purpose, avoid illegal behavior, and make informed decisions refers to its duty of loyalty 2 duty of fairness 3 fiduciary duty duty of care Sarah works as a customer sales representative for Ecstatic Wedding Planners, Inc. An appreciative customer gave Sarah a diamond bracelet (an unwanted wedding present) for her hard work in planning the perfect wedding. Can Sarah keep the bracelet valued at $500? Yes, because she became friends with the customer after the wedding, and the gift was intended specifically for her. Yes, if her supervisor, who is also part owner of the company, consents. * No, an agent is never allowed to personally profit from her agency relationship. Yes, because she has already given her two weeks' notice that she is quitting her job. Question 11 Jenny is a corporate officer and makes a difficult business that cost stockholders significant money. When challenged in court about her decision, the court rules that Jenny acted in good faith and that the business judgment rule applied. Consequently, 1 Jenny will not be personally liable. Jenny's decision will be reviewed by an appellate court. Jenny must resign from the board and indemnify the corporation for its losses. 4 Jenny will be immune from suit. Which of the following persons is NOT an agent? Roger, a real estate broker for a large real estate company. Sharon, a shoe salesperson in a retail store. 3 Teddy, a trustee to the beneficiaries of an estate. Phillip, a telephone marketing employee. Question 8 Amy prepared financial statements for Big Box, Inc., and knew the company would use the statements to apply for a loan at Big Bank. Amy was negligent in preparing the statements, and Big Bank sued her when Big Box defaulted on its loan. Under which doctrine(s) is Amy liable? Under all 3 doctrines, Ultramares, forseeable, and the Restatement doctrine Under foreseeable and the Restatement doctrines, but not Ultramares 3 Only under the Restatement doctrine. 4 Only Ultramares Management's duty to have a rational business purpose, avoid illegal behavior, and make informed decisions refers to its duty of loyalty duty of fairness 3 fiduciary duty duty of care Question 16 If an auditor determines its client is materially misstating certain items on its financial statements, she should issue a qualified opinion an unqualified opinion 3 a disclaimer of opinion an adverse opinion