The Purpose of a Proxy Contest Is for a Group

question 277

Multiple Choice

The purpose of a proxy contest is for a group of shareholders to:

• A) Acquire all of the remaining outstanding shares.
• B) Accumulate sufficient votes to gain controlling seats on the board of directors.
• C) Take a company private.
• D) Maintain their current percentage ownership once a stock dividend is declared.
• E) Gain control of the preferred stock.

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Definitions:

Net Present Value

A valuation method that calculates the value of future cash flows in today's dollars by discounting them at a particular rate.

Internal Rate Of Return

The critical interest rate that nullifies the net present value of cumulative cash flows from a project.

Discount Rate

The interest rate charged to banks for borrowing short-term funds directly from the Federal Reserve, or broadly, the interest rate used to discount future cash flows to present value.

Average Account Rate

represents the average rate of return on an investment or portfolio over a specific period.