1. What is the major difference between stocks and bonds?
stocks 1. Stocks represent ownership. 2. Stocks (common) do not have a fixed dividend rate. 3. Stockholders can elect the board of directors, which controls the corporation. 4. Stocks do not have a maturity date. The corporation usually does not repay the stockholder. 5. All corporations issue or offer to sell stocks. This is the usual definition of a corporation. 6. Stockholders have a claim against the property and income of the corporation after all creditors’ claims have been met. Bonds 1. Bonds represent debt. 2. Interest on bonds must always be paid, whether or not any profit is earned. 3. Bondholders usually have no voice in or control over management of the corporation. 4. Bonds have a maturity date, when the corporation is to repay the bondholder the face value of the bond. 5. Corporations do not necessarily issue bonds. 6. Bondholders have a claim against the property and income of the corporation that must be met before the claims of stockholders

2. Name and describe 4 rights of the Corporate Board of Directors?
1. Right to PaRticiPation The right to participation means that directors are entitled to participate in all board of directors’ meetings and have a right to be notified of these meetings. 2. Right of insPection A director also has a right of inspection, which means that each director can access the corporation’s books and records, facilities, and premises. 3. Right to inDemnification When a director becomes involved in litigation by virtue of her or his position or actions, the director may also have a right to indemnification (reimbursement) for the legal costs, fees, and damages incurred. 4. Right to Vote on issues. Directors’ rights include the rights of participation, inspection, indemnification, compensation, and (PIIC)

3. What is the “Business Judgment Rule” and when is it applicable?
. Under the business judgment rule, a corporate director or officer will not be liable to the corporation or to its shareholders for honest mis- takes of judgment and bad business decisions.

4. Name 2 methods by which a Shareholder earns money from a corporation?
1. Sell their shares 2. Dividends
5. Name 2 duties owed by Corporate Officers. To whom are these duties owed? What must corporate Officers
do to fulfill each duty?
1. Act in good faith (honestly). 2.Exercise the care that an ordinarily prudent (care- ful) person would exercise in similar circumstances. 3. Do what she or he believes is in the best interests of the corporation
6. Name 10 Shareholder Rights?
Shareholders have numerous rights, which may include the following: 1. Voting rights. 2. Preemptiverights(dependingonthecorporatearticles). 3. The right to receive dividends (at the discretion of the directors). 4. The right to inspect the corporate records. 5. The right to transfer shares (this right may be restricted in close corporations). 6. The right to receive a share of corporate assets when the corporation is dissolved. 7. The right to sue on behalf of the corporation (bring a shareholder’s derivative suit) when the directors fail to do so.8. right to transfer shares. 9.Right to attend meetings, 10.right to a prospective, 11.right to attend meetings</P>
7. How are Board of Directors meetings documented?
According to their bylaws. Typically recorded by the secretary by taking minutes.
8. How are acts of the Board of Directors documented?
According to their bylaws. Typically recorded by the secretary by taking minutes.
9. Define Quorum?
A quorum is the minimum number of members of a body of officials or other group that must be present for business to be validly transacted.<
10. Define Proxy?
The signed appointment form or electronic transmission authorizing an agent to vote the shares i
11. Name 3 types of Board of Directors Committees.
executive, audit, finance, human resources
12. List 4 descriptives (whether role or responsibility) of a Corporate Officer
1. Duty of care—Directors and officers are obligated to act in good faith, to use prudent business judgment in the conduct of corporate affairs, and to act in the corporation’s best interests. If a director or officer fails to exercise this duty of care, he or she may be answerable to the corporation and to the shareholders for breaching the duty. The business judgment rule immunizes a director from liability for a corporate decision as long as it was within the power of the corporation and the authority of the director to make and was an informed, reasonable, and loyal decision. 2. Duty of loyalty—Directors and officers have a fiduciary duty to subordinate their own interests to those of the corporation in matters relating to the corporation. 3. Conflicts of interest—To fulfill their duty of loyalty, directors and officers must make a full disclosure of any potential conflicts between their personal interests and those of the corporation

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Charcteristic	Sole Proprietorship	Partnership	Corporation	Limited Partnership	Limited Liability Company	Limited Liability Parnership
Method of Creation
Legal Position
Liability
Duration
Transferability of Interest
Management
Taxation
Organizatioal, License Fees and reports
Transaction in other states
Notes