A ________ Is When a Rich Individual or Organization Purchases

question 21

Multiple Choice

A ________ is when a rich individual or organization purchases a large fraction of the stock of a poorly performing firm and in doing so gets enough votes to replace the board of directors and the CEO.

• A)shareholder proposal
• B)leveraged buyout
• C)shareholder action
• D)hostile takeover

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Definitions:

Debt Financing

The practice of borrowing funds to finance the business operations or expansion, typically involving loans or issued bonds.

Cost of Equity

The return a firm theoretically pays to its equity investors, i.e., shareholders, to compensate them for the risk they undertake by investing their capital.

Financial Restructuring

The process of reorganizing a company's financial structure, typically in response to financial distress, to improve liquidity and stabilize the business.

Reorganization

The process of restructuring a company's business or financial arrangements, often in bankruptcy.