KorniCoIs Considering Possible Strategies to Defend Against a Hostile Takeover

question 127

Multiple Choice

KorniCo.is considering possible strategies to defend against a hostile takeover.They have narrowed it down to four options.Because of pressure from shareholders, they need to adopt a strategy that is shown to have a positive effect on shareholder wealth.Based on that criterion, which of the following should they choose?

• A) Capital structure change
• B) Corporate charter amendment
• C) Litigation
• D) Greenmail

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Definitions:

Straight-Line Method

A depreciation technique where an asset's cost is reduced equally over its useful life.

Effective Interest Method

A technique used in accounting to allocate loan discounts or premiums over the life of the loan to the periods benefiting from the loan, reflecting a constant rate of interest.