Chapter 8

Question 1

Exoneration

Answer 1

Suit to compel payment

“Before” surety pays creditor

Question 2

Subrogation

Answer 2

Enforcement of creditor’s right against principal

After surety pays

Question 3

Reimbursement

Answer 3

Suit against principal after payment
After surety pays
Surety may ask principal for reimbursement
Also called indemnification

Question 4

Defenses of surety

Answer 4

CPRS
Creditors acted in bad faith
Payment and tender of payment (if principal paid, surety is discharged)
Release of principal debtor (surety discharged unless creditor reserved rights against surety)
Surety’s incapacity or bankruptcy

Question 5

Joint venture

Answer 5

Formed for a single transaction or project or a related series of transactions or projects

Question 6

Restrictions on S corporations

Answer 6

1. Stock can be held by no more than 100 persons
2. Shareholders must be individuals, estates, or trusts
3. Corporation must generally be a domestic corporation
4. Only one class of stock
5. Foreign shareholders are prohibited

Question 7

Dissenting shareholders appraisal rights

Answer 7

DAMS

1. Dissolution
2. Amendment of constitution that can adversely affect the shareholders’ rights
3. Merger, consolidation, or share exchange
4. Sale of substantially all of the corporation’s assets outside the ordinary course of business

Question 8

Derivative action

Answer 8

When shareholders bring legal cause of action against someone because corporation refuses to bring the action itself.
“on behalf”

Question 9

Cap on FICA tax liability

Answer 9

6.2% on gross wages up to $113,700

Question 10

Who must participate in FUTA?

Answer 10

All employers who have quarterly payrolls of at least $1,500 or who employ at least one person for 20 weeks in a year

Question 11

Wagner Act

Answer 11

National Labor Relations Act
Prohibits employers from:
1. Interfering with employee attempts to unionize and bargain collectively
2. Discriminate against persons on the basis of labor union membership

Question 12

Taft-Hartley Act

Answer 12

Labor Management Relations Act
Labor unions are prohibited from charging excessive union fees, forcing employers to pay for unperformed services, or calling an improper strike

Question 13

What are required reports under the Bank Secrecy Act?

Answer 13

1. Currency Transaction Report (xns > $10,000) - filed within 15 days
2. Suspicious Activity Report - filed within 30 days
3. Report of International Transportation of Currency or Monetary Instruments Exceeding $10,000
4. Report of Foreign Bank and Financial Accounts Exceeding $10,000
5. Designation of Exempt Person Form

Question 14

Record Keeping requirements under the BSA

Answer 14

1. Customer Identification Program
2. Monetary Instrument Sales Records - between $3,000 and $10,000. Maintain records for 5 years
3. Funds transfer record keeping - keep records on all funds transferred > $3,000

Question 15

Sherman Act

Answer 15

Prohibits restraints of trade and monopolies

Question 16

Clayton Act

Answer 16

Aimed at anti competitive behavior not covered by the Sherman Act; stop such activities before they become violations of Sherman Act

Question 17

Robinson-Patman Act

Answer 17

Amended and strengthened Section 2 of the Clayton Act that prohibited price discrimination
Only apply to price discrimination of commodities of like grade and quality

Question 18

Volker Rule

Answer 18

Limits trading or investing by any banking entity in a hedge fund or private equity fund if the trading results in more than 3% ownership of the fund