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Score for this quiz: 2.18 out of 3

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Question 1

0.27 / 0.27 pts

A sole proprietorship offers less flexibility than does a partnership or a corporation.

True

False

IncorrectQuestion 2

0 / 0.27 pts

Consider the following facts:  Bill sells Corner Deli, a sole proprietorship, to Debra. This transfer represents:

A transfer of the assets of a sole proprietorship

The formation of a franchise relationship

Not a transfer of ownership—the assets of a sole proprietorship cannot be transferred

The creation of a partnership between Bill and Debra

A transfer of ownership, so long as the other owners approve of the sale

Question 3

0.27 / 0.27 pts

Consider the following facts:  Big Green Clothing, Inc. gives notice to Neely that it is terminating their franchise arrangement. Winding up the business requires:

Payment from Big Green to Neely for the shares of stock she owned

A new franchise agreement

Nothing more than closing immediately

The return of the franchisor’s property

Neely’s death, disability, or insolvency

IncorrectQuestion 4

0 / 0.27 pts

On dissolution, the creditors of a partnership and the creditors of the individual partners can make claims on the partnership’s assets.

True

False

Question 5

0.27 / 0.27 pts

Consider the following facts:  Sara and Terry agree while talking on the phone to form a general partnership to enter into the business of real property management.  To be enforceable under the Statute of Frauds, their agreement must:

Not include any third party

Be filed with the appropriate state office

Be in writing

Include all of the above

Be signed by a notary public

Question 6

0.27 / 0.27 pts

Consider the following facts:  Ed, a partner in Farm Equipment Sales, applies for a loan with AgBank allegedly on Farm Equipment’s behalf but without the authorization of the other partners.  The bank knows that Ed is not authorized to take out the loan. Liability in the event of default will be imposed on:

No one

Ed

Farm Equipment Sales

Ag Bank

The other partners

Question 7

0.27 / 0.27 pts

A corporation is a creature of statute.

True

False

Question 8

0.27 / 0.27 pts

Consider the following facts:  Sierra is a holder of preferred stock in Rio Grande Irrigation, Inc.  Sierra has priority over holders of Rio common stock as to:

Upward changes in the market price of shares

Payment of dividends

All of the above

Nothing

The date on which Rio Grande must repurchase shares

Question 9

0.28 / 0.28 pts

Consider the following facts:  Blair and Chanel are holders of common stock in Discount Retail Stores, Inc.  Like other holders of common stock, they have a residual position in the overall financial structure of Discount Retail, because they:

All of the above

Reside in the state of the firm’s incorporation

Are guaranteed to receive more than the amount of their investment

Have priority in the firm’s assets if it becomes insolvent

Are last in line to receive a return on their investment

IncorrectQuestion 10

0 / 0.28 pts

From your review of the Required Resources in Module 5, which of the following were reasons given for Spotify to choose a direct listing rather than an IPO?

1. Spotify wanted to offer greater liquidity for its existing shareholders, without raising capital itself and without the restrictions imposed by standard lock-up agreements
2. Spotify wanted to provide unfettered access to all buyers and sellers of its shares, allowing Spotify’s existing shareholders the ability to sell their shares immediately after listing at market prices
3. Spotify’s lawyers informed the company that an IPO was impossible under its current ownership structure
4. Spotify believed it was constrained by the requirements of agency/principal law to utilize a direct listing
5. Spotify wanted to conduct its listing process with maximum transparency and enable market-driven price discovery

Items 1, 2, and 3

Items 1, 2, and 5

Items 1, 3, and 4

Items 2, 4, and 5

Items 3, 4, and 5

Question 11

0.28 / 0.28 pts

In his foundational 1970 article, “The Social Responsibility is to Increase its Profits,” Milton Friedman assumes without critique the application of a principal/agent relationship between corporate shareholders and management.

True

False