Answer Choice 1	Answer Choice 2	Answer Choice 3	Answer Choice 4	Selected Answer
Question 1:  Janine owns Toys for Tots, Inc., which is having financial problems. She recently found a new toy she thinks will sell very well during the next Christmas season. She just needs sufficient funds to stay in business until then. What is the best way for Janine to keep her business afloat?
File for Chapter 12 Bankruptcy	File for Chapter 11 Bankruptcy	File for Chapter 13 Bankruptcy	File for Chapter 7 Bankruptcy
Question 2:  Spencer was a major shareholder in a corporation. Two weeks before the news was made public, he found out that the company was close to filing bankruptcy. So, he sold all his shares in the company, earning a huge profit before the market price dropped precipitously. Once it is discovered that Spencer traded on insider information, what will happen to him?
He will face civil liability	Any or all of these remedies are possibilities	He will face criminal liability	He will be forced to disgorge the profits
Question 3:  Grace and Megan are partners in a local newspaper. They want to raise funds to expand their operations. They feel the best way to do that is via an IPO. With whom should they meet for assistance with their plan?
An accountant	Any and all of the other choices would be helpful	An investment banker	An attorney
Question 4:  The Board of Textile Manufacturing operates numerous subsidiaries. It is considering combing one of its subsidiaries, Blouses by JoAnn, with its own operations, since it already owns 95% of Blouses’s stock. What technique would the board use to accomplish this goal?
A short form merger	A proxy contest	A bear hug	A consolidation
Question 5:  Arthur is an attorney for a law firm. One day, while working with a major, publicly-traded entertainment company, Arthur overheard someone mention that a publicly traded cable company wanted to buy them. The next day, Arthur bought 100 shares of the entertainment company. After the takeover news hit the business press the entertainment company stock increased by $5.00 per share. Arthur quickly sold the stock and pocketed a $500 profit. Arthur’s action constituted:
A breach of fiduciary duty	Insider trading	Arthur’s action was perfectly legal	Corporate espionage
Question 6:  Tucker is one of the board members of Alistair Music, Inc., a record company in Nashville, TN. Its stock trades on the NYSE. A few wealthy individuals own the bulk of the stock. Recently, the music industry has been going through consolidations. As such, several other music companies are interested in acquiring Alistair to boost their market share. One of the major shareholders has hinted that he wants to get out of the music business. Secretly, this shareholder has approached a competing music conglomerate about acquiring his shares. In addition, another music company has been buying Alistair shares. Yet a third company has offered a price that is three times Alistair’s current share price. What technique is this third company using to acquire Alistair?
A poison pill	A hostile takeover	A bear hug	Leverage
Question 7:  Which of the following debts are definitely dischargeable under the Bankruptcy Code?
Outstanding balance on a MasterCard	A court order to pay child support.	The pending 'pain and suffering' award to the victim of a car accident (accident was caused by a drunk driver).	Taxes owned to the Unites States
Question 8:  Griffin Industries, Inc. wants to raise money through issuing stock in its company. Which agency is in charge of regulating stock offerings?
GAAP	SEC	FASB	AICPA
Question 9:  Alan is preparing his paperwork to file bankruptcy. Which court has jurisdiction to hear his case?
Federal Court of Appeals	State trial court	State small claims court	Federal Bankruptcy Court
Question 10:  Which of the following is a charcteristic of a Chapter 7 bankruptcy proceeding?
The parties will negotiate as to how the debtor can repay his or her debts over the course of many years	If a company is filing for Chapter 7, it will probably have to cease doing business	The debtor remains in possession of his property until the case is over	Only a corporation, not an individual, can file for Chapter 7 bankruptcy
Question 11:  Thomas has been in the travel business for 15 years. He has developed a very loyal following and his company is very profitable. His major competitor, Tours R Us, wants to take over Thomas’s business. Rather than let his company end up in his competitor’s hands, he consults with a friendly business partner to acquire a part of his company. This business partner would be considered a(n):
Trustee	Venture capitalist	Investment banker	White Knight
Question 12:  Reginald is the CEO of a company that was founded by his grandfather 50 years ago. Recently, a competitor has approached him about buying the company. Reginald wants to keep the company in the family and discourage an outsider from acquiring the company. What would be an effective technique to use to ward off suitors?
A derivative suit	A poison pill	A bear hug	A leveraged buyout
Question 13:  Ten months prior to filing his petition under Chapter 7, Rodney sold his home to Frank (a co-worker) for $50,000 because he needed the money to pay off some debts. Rodney had no fraudulent intent and actually believed that $50,000 was a fair price. The fair market value of the home at the time of the sale was actually $100,000. Frank knew the house was worth $100,000; however, he was acting in bad faith because he knew that Rodney was insolvent and in a desperate financial condition. Which of the following statements is the most accurate?
The Chapter 7 trustee cannot avoid the sale because Rodney lacked actual fraudulent intent.	The Chapter 7 trustee can avoid the sale because Frank acted in bad faith.	The Chapter 7 trustee cannot avoid the sale because it occurred more than 90 days before the filing of the Chapter 7 petition.	The Chapter 7 trustee can avoid the sale if the court finds that $50,000 was not a fair price.
Question 14:  Patty and her brother, Todd, are directors in their family-owned hotel corporation. They wish to raise money via an IPO. What is the document they must prepare before they can sell shares in the corporation?
A corporate tax return	Management’s discussion and analysis	Financial statement	A prospectus
Question 15:  Paulette was in desperate need for a new car. Fortunately, her local car dealership was offering a special deal—a 0% annual percentage rate (APR) for a three-year loan, up to 95% of the cost of any new car purchased during the promotional period. Six months after Paulette bought a $30,000 car she had some financial problems and was forced to file bankruptcy. If the bank continues to pursue Paulette for payment, what is the bank violating?
a purchase money security interest	a secured transaction	an automatic stay	a fiduciary duty
Question 16:  Mona needed a new stove for her bakery. In addition to the stove being collateral for the loan, she also put up the other equipment in the bakery as collateral. If she defaults on her payments, which type of creditor has the LEAST priority in gaining her collateral to pay off the debt?
Semi-secured creditor	Unsecured creditor	Purchase money security interest holder	Secured creditor
Question 17:  Palmer is a billionaire who is always looking for a promising investment. Through a friend he has heard about a chef who has made a name for himself through his restaurant and appearances on a local talk show. The chef wants to expand his business by producing his products for distribution to grocery stores; however, he needs capital for the venture. If Palmer invests in the business, he would be:
An angel investor	A corporate raider	A founder	A market maker
Question 18:  Beaver Brothers, Inc. is in need of cash to start a new product line. The owners plan to pump all the funds raised into this new operation, so they want to keep their fixed monthly costs as low as possible. What type of financing arrangement would you recommend?
Loan from another source	Bond issuance	Bank loan	Stock offering
Essay Question:   Melissa is the CEO and board member of a major bank headquartered in Chicago. Ernest is the CEO and board member of a competing bank headquartered in New York City. Both banks have thousands of shareholders. Ernest has informally shown an interest in Melissa’s bank for several years at various banking events. When they meet this year at an annual banking convention, Ernest earnestly wants to merge the two banks. This year, the stock prices of the two banks makes a deal attractive for Melissa’s shareholders. Discuss briefly what steps Melissa can take to prevent Ernest from completing the merger.