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Question 1
Shareholders of X Co. have decided to sue for appraisal rights. The courts are now trying to determine a price for the shares that the shareholders decided not to sell. Such a trial is known as a determination of:
Correct
Incorrect!
Correct In an action against the corporation for appraisal rights, the court is trying to determine the fair market value (FMV) of the shares that shareholders decided not to sell. The FMV is a court determination which attempts to determine what the value of the shares should have been in the transaction.
Incorrect! In an action against the corporation for appraisal rights, the court is trying to determine the fair market value (FMV) of the shares that shareholders decided not to sell. The FMV is a court determination which attempts to determine what the value of the shares should have been in the transaction.
Correct
Incorrect!
Correct
Incorrect!
Question 2
Under which of the following conditions are shareholders most likely to be entitled to appraisal rights?
Correct Any change that is going to effect a fundamental right of all, or any significant group, of shareholders is going to result in a shareholder right of appraisal. Such an appraisal right will occur in situations such as corporate mergers, changes to the voting or dividends rights of shareholders, or other changes to the corporate structure.
Incorrect! Any change that is going to effect a fundamental right of all, or any significant group, of shareholders is going to result in a shareholder right of appraisal. Such an appraisal right will occur in situations such as corporate mergers, changes to the voting or dividends rights of shareholders, or other changes to the corporate structure.
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Question 3
Tim is a shareholder in Y Corp. He has decided that he would like to assert appraisal rights. Which of the following would pose a problem for his being able to assert those rights?
Correct
Incorrect!
Correct
Incorrect!
Correct In order to assert an action for appraisal, a shareholder must first have voted against the transaction, and notified the corporate Secretary that he intended to file for appraisal. The reason for this rule is it would make no legal sense to allow shareholders to vote for the transaction and then still assert the right of appraisal.
Incorrect! In order to assert an action for appraisal, a shareholder must first have voted against the transaction, and notified the corporate Secretary that he intended to file for appraisal. The reason for this rule is it would make no legal sense to allow shareholders to vote for the transaction and then still assert the right of appraisal.
Correct
Incorrect!
Question 4
A court has been asked to render a judgment as to the fair market value (FMV) of Z Corp. after a recent merger it conducted with another firm. In evaluating the value of the firm, which of the following items might the court take into consideration?
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Correct The act of determining the FMV of a corporation is not an exact science as far as courts are concerned. Ultimately, a court trying to determine a company's FMV will look to any and all factors that might be helpful in determining the value. Moreover, courts may well vary as to the weight that they will give to the various items of information available depending on how important the court feels it is.
Incorrect! The act of determining the FMV of a corporation is not an exact science as far as courts are concerned. Ultimately, a court trying to determine a company's FMV will look to any and all factors that might be helpful in determining the value. Moreover, courts may well vary as to the weight that they will give to the various items of information available depending on how important the court feels it is.
Question 5
In constructing a discounted cash flow model of a company for appraisal / fair market valuation purposes, the researcher would look at which of the following items?
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Correct The discounted cash flow (DCF) modeling of a firm is something that often occurs in appraisal actions. Often, experts from both sides of the litigation will attempt to show the court a DCF model that depicts a version of the firm's cash flows that favors their client's side. Typically, a court will listen to these two interpretations, alter them in a way that seems to fit the facts as the court views them, and determine a value for the corporation somewhere in between the value asserted by the litigants.
Incorrect! The discounted cash flow (DCF) modeling of a firm is something that often occurs in appraisal actions. Often, experts from both sides of the litigation will attempt to show the court a DCF model that depicts a version of the firm's cash flows that favors their client's side. Typically, a court will listen to these two interpretations, alter them in a way that seems to fit the facts as the court views them, and determine a value for the corporation somewhere in between the value asserted by the litigants.