All of the Following Statements Are TRUE About the Use

question 16

Multiple Choice

All of the following statements are TRUE about the use of defense tactics by the target firm during a hostile takeover EXCEPT:

• A) defense tactics are usually beneficial for the executives of the target firm.
• B) defense tactics are opposed by institutional investors.
• C) defense tactics vary in their effectiveness as a defense to takeovers.
• D) defense tactics make the costs of a takeover lower.

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Definitions:

Predicted Sales

Forecasted revenue from goods or services sold over a future period, based on current trends or analyses.

Sales Dilution Approach

A method used in finance to estimate the impact of issuing new shares on the earnings per share by assuming no increase in sales.

Pro Forma Balance Sheets

Financial statements prepared in advance of a planned transaction, showing the expected financial position of a company.

Pro Forma Statements

are financial reports that companies use to project future financial performance based on past and current financial conditions.