Finance mcq. identify the choice that best completes the statement or


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Multiple Choice

Identify the choice that best completes the statement or answers the question.

1. Jeff owns a house. There is a throw rug in the house on a tile floor. Which of the following is most likely to meet the definition of a fixture?

a. the house.

b. the throw rug.

c. the tile floor.

d. None of the above.

2. Floyd tells his daughter Glenda that she can have his Harley Davidson when he dies, but he does not add this to his will. What type of transfer, if any, is this?

a. It is an intestate disposition.

b. It is a valid inter vivos gift.

c. It is a valid specific testamentary devise.

d. It is not a valid gift.

3. Delacroix discovers a boat adrift, and he retrieves and anchors it. The boat has a number on its side and other evidence pointing to its owner, Elvira. This is

a. an involuntary bailment.

b. a voluntary bailment.

c. an express bailment.

d. Not a bailment.

4. Jack and Jill, who are brother and sister, own 10,000 shares of stock in My-T Gro Corporation. Because of the manner in which title is set up, on the death of either owner, that owner’s interest in the stock will pass by operation of law to the surviving owner who will own all of the shares, outright. What type of ownership interest is this?

a. a tenancy in common.

b. a life estate.

c. a joint tenancy.

d. a tenancy by the entireties.

5. Quito and Raul own a condo near San Francisco Bay as joint tenants. Raul sells his ownership rights in the condo to Timor. Quito and Timor own the condo as

a. community property owners.

b. joint tenants.

c. tenants at sufferance.

d. tenants in common.

6. Donna signs a one-year lease with Mae to occupy an apartment in Ames, Iowa, near the University of Iowa. Donna needs the apartment only for two semesters and may have to sublet it for the rest of the term. Donna’s tenancy is

a. a periodic tenancy.

b. a tenancy at will.

c. a tenancy by the entirety.

d. a tenancy for years.

7. Tyro has the right to drive across Ula’s land, which is next to Tyro’s property, to reach an access road. Tyro’s right is

a. an easement appurtenant.

b. an easement in gross.

c. a profit appurtenant.

d. a profit in gross.

8. Hobby Farms, Inc., owns rural property that it leases to various tenants, including Ira. Ira’s transfer of his entire interest in the leased property to a Jason is

a. an assignment.

b. an eviction.

c. a right of entry.

d. a sublease.

9. Grace applies for a homeowners’ insurance policy on her house with Heroic Insurance Company through Ian, a broker. In this transaction, Ian is

a. an agent for both parties.

b. Grace’s agent, and not Heroic’s agent.

c. Heroic’s agent, and not Grace’s agent.

d. not an agent.

10. General Allied Company obtains insurance policies with Hy-Rate Insurance, Inc., and Ideal InsurCo against the risk of loss of General’s office building in a fire. Each policy includes a multiple insurance clause. A fire partially destroys the building. General can collect from Hy-Rate

a. all of the loss.

b. half of the loss.

c. its proportionate share of the loss to the total amount of insurance.

d. none of the loss.

11. According to the terms of Carmen’s will, specific devises are made, and taxes and other estate expenses and debts are directed to be paid. The assets of Carmen’s estate that remain after payment of specific devises, taxes, expenses, and debts are most likely to be distributed to

a. by codicil.

b. holographically.

c. to the state’s unclaimed asset department.

d. through a residuary clause.

12. Don executes a will leaving half of his farm to his spouse Elsie and the rest to his sons, Frank and Greg, in equal shares. The will disinherits a third son, Hal. Don and Elsie divorce, but Don dies before changing his will. Under the Uniform Probate Code

a. Elsie receives half of the farm, and Frank and Greg share the rest.

b. Elsie receives half of the farm, and Frank, Greg, and Hal share the rest.

c. Frank and Greg receive the entire estate in equal shares.

d. the state inherits the entire estate.

13. Grey has two children, Ham (the eldest) and Ivy, both of whom predecease Grey. Ham is survived by a daughter, Jess, and Ivy by two sons, Kato and Lars. On Grey’s death, if the estate is distributed per stirpes

a. each grandchild receives one-third of the estate.

b. Jess receives one-half of the estate, and Kato and Lars each receive one-fourth.

c. Jess receives the entire estate.

d. the grandchildren receive nothing, and the estates of Ham and Ivy each receive one-half.

14. Orin creates a living trust to pass his assets, including stock in Petro Oil Company and other business investments, to his heirs. One advantage of this arrangement is that

a. income taxes do not have to be paid on trust earnings.

b. the assets are sheltered from the payment of estate taxes.

c. the assets can be transferred without going through probate.

d. the trust does not come into existence until the grantor’s death.

Fact Pattern A. Nikita owns land in Ohio. Her ownership rights include the right to sell or give away the property without restriction, and the right to commit waste, if she chooses.

15. Refer to Fact Pattern A. What type of ownership interest does Nikita’s have?

a. a fee simple absolute.

b. a leasehold estate.

c. a life estate.

e. an easement.

16. Refer to Fact Pattern A. Nikita conveys some of her land to Reggie with the right to possess and use the property for a five years. Nikita has given Reggie

a. a fee simple absolute.

b. a leasehold estate.

c. a life estate.

d. an easement.

17. Sable and Rex agree while talking on the phone to form a partnership to deal in transfers of real property. Their partnership agreement is legally binding

only if a copy of the agreement is filed in the appropriate state office.

only if the agreement is reduced to writing.

only if the parties exchange valid consideration.

without doing anything else.

18. Fay is a newly admitted partner in Global Associates, an existing partnership. A partnership debt incurred before the date of her admission subsequently comes due. Fay is

a. not liable for the debt.

b. only liable for the debt up to the amount of her capital contribution.

c. personally liable only to the extent the other partners do not pay.

d. personally liable to the full extent of the debt.

19. Jay is a member of Kappa, LLC, a limited liability company. As a general rule, Jay is liable for Kappa’s debts

a. in proportion to the total number of members of the limited liability company.

b. to the extent of his investment in the limited liability company.

c. to the extent that the other members of the limited liability company do not pay the debts.

d. to the full extent of the debt of the limited liability company.

20. CPA Accounting, LLC, (CPA) is a limited liability company. Assuming that the law in CPA’s state is like the law in most states, then unless the members have agreed otherwise, participants in the firm’s management will be considered to include

a. all members.

b. no member.

c. one member.

d. two members, including at least one general partner.

21. Start-Up Corporation substantially complies with all conditions precedent to incorporation. Start-Up has

corporate existence by estoppel.

de facto existence.

de jure existence.

ultra vires existence.

22. EFG Corporation fails to hold a meeting to adopt bylaws. Under this circumstance, EFG Corporation will still be treated as a legal corporation in those states that recognize the common law doctrine of

a. corporation by estoppel.

b. de facto corporation.

c. de jure corporation.

d. ultra vires.

23. Quixotic Company claims to be a corporation but it is not. Rachel signs a contract with Quixotic that is not performed. In Rachel’s suit against Quixotic Company, a court will likely recognize the firm as

a. a corporation by estoppel.

b. a de facto corporation.

c. a de jure corporation.

d. an ultra vires corporation.

24. Patsy possesses twenty-four acres of remote, rugged land. Patsy has the right to use the property, including extracting silver from an existing mine, for life. Patsy also has the right to lease the land for a period not to exceed her life. This ownership interest is

a. a fee simple absolute.

b. leasehold estate.

c. a life estate.

d. the power of eminent domain.

25. Edna and Flavia buy a boat that they dock in a marina near Gulfport, Mississippi. On the death of either owner, that owner’s interest in the boat passes to her heirs. This is

a joint tenancy.

a life estate.

a tenancy in common.

None of the above.

26. Tom owns all of the stock of XYZ corporation. XYZ corporation owns 100 acres of undeveloped real estate in fee simple. Tom’s will leaves all of his property “to his sister, Susan, if she survives him, but if she does not survive him, then to her then living issue, per capita.” When Tom dies, Susan has one surviving child, Jane. Susan’s son, Peter, predeceased Tom leaving two children, Jack and Jill, who survived Tom. Tom’s will is admitted to probate. After payment of expenses, taxes, and debts using only cash assets that Tom owned at his death, the balance of Tom’s estate will be distributed according to the will. Under these facts, how will title to the100 acres of real estate be held after completion of the estate administration?

Susan, Jane, Jack, and Jill will own 100 acres of undeveloped real estate, as tenants in common.

Susan will own 100 acres of undeveloped real estate.

XYZ Corporation will own 100 acres of undeveloped real estate.

None of the above.

27. Jody, Kent, and River Company, a limited liability company owned equally by Jody and Kent, are the owners of Local Motion, a limited partnership that owns a night club and the land upon which it is located. River Company is the general partner, and Jody and Kent are limited partners. The business is profitable and federal income taxes are owed. Under the default rules for federal taxation, the taxes will be paid by

a. Local Motion only.

b. Jody and Kent only.

c. Jody, Kent, and River Company only.

d. None of above.

28. XYZ Corporation (the corporation) has been profitably operating a retail sales business for several years. Jamal is the sole shareholder, officer, and employee of the corporation. On October 6, 2012 the corporation entered into a five-lease with Kelvin and moved its business into the new premises. On November 10, 2012, The Last Rational Bank made a $5,000 loan to the corporation. On February 1, 2013, a patron slipped and fell in the premises, seriously injuring her back. The February rent and loan payments are in default. For which will Jamal be subject to personal liability?

a. The loan and rent only

b. Damages for the slip and fall only

c. The loan, the rent, and damages for the slip and fall.

d. None of the above.

29. Cornucopia Farms LLC possesses farmland. Cornucopia has the right to use the property, including harvesting the crops, for ten years. Cornucopia does not have the right to extract the coal under the land. This is

a fee simple absolute.

a leasehold estate.

a life estate.

an easement.

30. Utility Power Company has the right to run its power lines across Velma’s land. This is

a. a license.

b. an easement.

c. a profit.

d. a tenancy aa sufferance.

31. Clayton dies with a will that the court determines was not properly signed by Clayton. The distribution of Clayton’s property, including his farm near Lincoln, Nebraska, is prescribed by

a. a court-appointed executor

b. federal probate statutes

c. state intestacy laws

d. Clayton’s relatives

32. Keri’s will states, “I give to my sister Liz my condominium in Malibu, California.” This is

a. a general legacy

b. a residuary

c. a disposition in trust

d. a specific devise

33. Floyd tells his daughter Glenda, who is Floyd’s only child, that she can have his Harley Davidson when he dies, but he does not add this to his will. When Floyd died a year later, his will did not mention the Harley Davidson. Floyd’s will was admitted to probate. Glenda survives Floyd, and at the time of Floyd’s death, Glenda has two adult childrc children who survive Floyd. Floyd’s will provides that all of his property passes through the residuary clause to his lineal descendants, per stirpes. Who gets the Harley Davidson, and what type of transfer is this?

a. Glenda gets the Harley Davidson. There was an inter vivos gift of the Harley Davidson to Glenda.

b. Glenda gets the Harley Davidson. The Harley Davidson will pass by intestate succession to Glenda as it is not mentioned in the will.

c. Glenda gets the Harley Davidson. This was is a valid specific testamentary devise.

d. Glenda will get a one-half interest, and her two children will receive a one-quarter interest each.and her two children will each get a one-third interest, as tenants in common, in the Harley Davidson as a residuary devise.

e. None of the above.

34. Brent leases an apartment from Cris for one year. After two months, she sublets the premises for the next six months to Dee, without obtaining Cris’s consent. Dee pays the rent for only four months. For the last two months of Dee’s six-month term, Brent is

a. liable for the rent, because Dee defaulted.

b. liable for the rent, because the sublease lacked Cris’s consent.

c. not liable for the rent, because Bren does not own the apartment.

d. not liable for the rent, because Bren sublet the premises to Dee.

35. Sid rents an apartment from Town Homes, Inc. The lease, which ends on May 31, does not include an option for renewal, and Sid and Town do not discuss whether Sid can stay on at the end of the term. There is no state statute that addresses this. On June 1, Sid has

an implied option to renew the term.

a right to remain contingent on notice from Town.

a right to remain subject to notice to Town.

no right to remain.