A Fairness Opinion Is Used Most Often When

question 31

Multiple Choice

A fairness opinion is used most often when:

• A)An unsolicited hostile tender offer is received from a potential acquirer who owns no stake in the target firm.
• B)A controlling shareholder seeks approval for an amalgamation.
• C)Determining whether the exchange ratio in a stock swap transaction is appropriate.
• D)None of the above.

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Definitions:

Excess Capacity

Excess capacity refers to a situation where a company is operating below its maximum output level, indicating that it can produce more with the current resources if there is higher demand.

Expansionary Fiscal Policy

To fight recessions, the federal government lowers taxes and/or raises spending.

Government Spending

Expenditures made by the government of a country on collective needs and wants such as infrastructure, public safety, education, and healthcare.

Public Debt

Money that is owed by a government to creditors within the country or externally, arising from borrowing to finance expenditures exceeding tax revenues.