You Have Been Asked by Two Fellow Graduates to Join

question 21

Multiple Choice

You have been asked by two fellow graduates to join them in incorporating a closely held corporation that would commence a consulting business. One was in your class, so you know him quite well, but the other is graduating from a different school. You have been discussing the law to review the protection it gives you. Read each of the following statements separately and indicate which is false.

• A) A shareholder's agreement would lessen any misunderstandings about rights and obligations.
• B) If you have preemptive rights and the directors decide to issue a new allotment of shares, the corporation must offer you a portion of the new issue to allow you to keep your proportional share of the corporation.
• C) If you were voted out as a director by the others, who could show that it was in the best interests of the corporation, you could always sell your shares to any interested buyer without interference from the other directors.
• D) As a shareholder, you will have the right to vote for the directors, who in turn will choose the officers.
• E) If you each take one-third of the first allotment of the shares, you will necessarily be a minority shareholder.

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Definitions:

Explanatory Strength

The ability of a hypothesis or theory to effectively explain the breadth and depth of a phenomenon or set of observations.

Field Research

The collection of raw data outside of a lab, workspace, or controlled environment, often in its natural setting.

Descriptive

Pertaining to the detailed description of characteristics, behaviors, or phenomena, without attempting to influence or change them.

Experimental

Pertaining to a method of research in science that involves the manipulation of variables to test a hypothesis and observe the effects.