Multiple choice

1. Daystar Company is a private, for-profit corporation that (1) was formed for the purpose of marketing business office software, (2) is owned by ten shareholders, (3) is subject to double taxation, and (4) has made no public offering of its shares. Daystar is

a. a nonprofit corporation.

b. an S corporation.

c. a professional corporation.

d. a close corporation.

2. Naomi and Ogden are shareholders of MediCare Residences, Inc. As shareholders, they must approve

a. terminating a managerial employee.

b. conducting a merger.

c. negotiating a contract between management and labor.

d. deciding to pursue new business opportunities.

3. Genna is a director of Fab Stuff Corporation. Without informing Fab, Genna starts up Evertrendy, Inc., to compete with Fab. Genna is liable for breach of

a. the duty of loyalty.

b. no duty or rule.

c. the right of participation.

d. the business judgment rule

4. Ruben is a shareholder of Speed Bikes Company (SBC). When the directors fail to undertake an action to redress a wrong suffered by SBC, Ruben files a suit on the corporation’s behalf. Any damages recovered by Ruben’s suit will normally go to

a. Ruben.

b. SBC.

c. SBC’s directors.

d. the state in which SBC is incorporated.