1. Jodie’s brother is a director at Trip Corporation. He calls her and says that Trip’s earnings, not yet announced, will be up by 75 percent and that Jodie should buy Trip’s common stock. Under these circumstances, Jodie:

Question options:

A. can trade because the information will eventually be made public.

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B. cannot trade because she is not an insider.

C. cannot trade because she is the relative of an insider and the information is not public yet.

D. can trade because she obtained public information from an insider

2. Romano, a shareholder of Specific General Inc., wishes to communicate with other shareholders concerning matters related to the corporation. So he requests the management to provide him with a list of all shareholders of the corporation. Citing administrative burden, the management informed Romano that shareholders could not review such records. The management turns down repeated requests citing the same reason. In this scenario, Romano:

Question options:

A. should appeal for amendment of the corporation’s laws to make public all shareholder information.

B. can bring suit to enforce his right to examine the shareholder list as he has proper purpose.

C. cannot hold Specific General liable because the Model Business Corporation Act (MBCA) discourages the disclosure of shareholder information.

D. will be penalized 10 percent of value of his shares if he loses an appeal against the management.

3. When a corporate manager makes an honest error in judgment, the business judgment rule directs that the manager will:

Question options:

A. be liable for all losses resulting from the error.

B. not be liable and a court will step in to correct the manager’s mistake.

C. not be liable if he acted with care and in good faith

D. be liable for corporate losses.

4. A non-profit is not allowed to make any profit.

Question options:

A. True
B. False
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