UESTION 1

Recently, a slate of directors who were elected to the board of Diamond Drilling sought to change the company's business practices with respect to climate change. These investors belong to a type known as

	a.	entrepreneurial investors.
	b.	subversive investors.
	c.	activist investors.
	d.	institutional investors.

4 points

QUESTION 2

An agent may not engage in inappropriate behavior that reflects badly on the principal. This rule applies to conduct

	a.	during working hours.
	b.	during off-duty time.
	c.	during both working hours and off-duty time.
	d.	only by public officials.

4 points

QUESTION 3

What constitutes a social enterprise's "triple bottom line"?

	a.	Employees, customers, and profits
	b.	Assets, liabilities, and revenue
	c.	Social concerns, shareholders, and sales
	d.	People, planet, and profits

4 points

QUESTION 4

Charlie and Juan operate a commercial real estate company as a general partnership. They buy distressed properties and fix them up for resale. One day while looking at a distressed building, Charlie had the idea that this would be a great spot for a fashion design studio, which has always been his real dream. Charlie decided not to tell Juan about the building and made a bid himself. Which of the following statements is true?

	a.	Charlie is justified in pursuing the building for a side project, even without Juan's knowledge.
	b.	Charlie has breached his fiduciary duty to Juan.
	c.	Charlie has committed a crime by refusing to share the information with Juan.
	d.	Charlie has to tell Juan about the building but does not need Juan's consent to bid on the building personally.

4 points

QUESTION 5

Devanie owns a retail business by herself and was sued by a customer who fell in the store. The customer claimed the business was negligent in caring for its floors. Which statement best describes Devanie's potential liability?

	a.	Devanie has no potential liability to the customer.
	b.	Devanie can be held personally liable to the customer because she is the owner.
	c.	Devanie can only be liable up to the amount she initially invested in the business.
	d.	Devanie cannot be held personally responsible; the woman's insurance must pay for the claim.

4 points

QUESTION 6

A court may pierce an LLC's veil if

	a.	members fail to provide adequate capital.
	b.	members treat the LLC like a separate organization.
	c.	members keep their assets and the assets of the LLC separate.
	d.	the LLC has too many members.

4 points

QUESTION 7

A corporation must obtain shareholder approval before the company

	a.	sells off a major portion of its business to another company.
	b.	opens additional offices.
	c.	hires or fires a significant number of employees.
	d.	expands into foreign markets.

4 points

QUESTION 8

Diego, his parents, and three brothers own all the stock of their family corporation, and each person takes an active role in managing the enterprise. This corporation, which is taxed as a corporation, is most likely a(n)

	a.	S corporation.
	b.	professional corporation.
	c.	close corporation.
	d.	proprietorship.

4 points

QUESTION 9

Mohammed, Stella, and Emmanuel have been best friends and colleagues for over a decade. They decide to start an art curating business, called Art Curators LLC. Should they draft an operating agreement?

	a.	Yes, an operating agreement must be filed by a limited liability company (LLC) with the secretary of state in the home state of the company.
	b.	No, an operating agreement is not necessary between long-term friends and colleagues.
	c.	No, only partnerships must draft an operating agreement.
	d.	Yes, it is wise to have an operating agreement to control situations like the transfer of interests and dissolution.