Which of the Following Is the Best Definition of a Poison

question 219

Multiple Choice

Which of the following is the best definition of a poison pill?

• A) The splitting up of a company into two or more companies.
• B) The distribution of shares in a subsidiary to existing parent company shareholders.
• C) Provisions allowing existing shareholders to purchase stock at some fixed price should an outside takeover bid take place, discouraging hostile takeover attempts.
• D) Attempts to gain control of a firm by soliciting a sufficient number of shareholder votes to replace existing management.
• E) A financial device designed to make unfriendly takeover attempts unappealing, if not impossible.

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Definitions:

Policy Tools

Policy tools are mechanisms used by government or monetary authorities to influence the economy, such as interest rates, taxation, and government spending.

Economy's Potential

The economy's potential refers to its maximum productive capacity when resources are fully employed, indicating a state where unemployment is at the natural rate and there is no demand-pull inflation.

Fiscal Policy

Policy made by the government which entails modifying how much it spends and adjusts tax rates to control and affect the economic health of a nation.

Rational Expectations School

An economic theory suggesting individuals make predictions about future economic events using all available information and past experiences.