The Purpose of a Proxy Contest Is for a Group

question 17

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:

Annual Coupon

The yearly interest payment made to bondholders, expressed as a percentage of the bond's face value.

Bond-Yield-Plus-Risk-Premium

A method of estimating the cost of equity by adding a risk premium to the observed yield of a company’s long-term debt.

WACC

An assessment of a firm's cost of capital, where each category of capital is proportionally weighted to calculate the average cost.

Marginal Costs

Marginal costs refer to the change in total cost that arises when the quantity produced is incremented by one unit.