AAA Company Stock Has a Higher Expected Rate of Return

question 48

Multiple Choice

AAA Company stock has a higher expected rate of return than ZZZ Company stock.All else being equal,you would expect that relative to ZZZ,AAA company stock provides

• A)less risk and less liquidity.
• B)less risk and more liquidity.
• C)more risk and less liquidity.
• D)more risk and more liquidity.

---

Definitions:

Poison Pill Defense

A strategy used by companies to prevent or deter hostile takeovers by making the target company less attractive to the acquirer.

Greenmail Arrangement

A situation where a company buys back its own shares from a potential acquirer at a higher price to avoid a takeover attempt.

Pre-Offer Strategy

A plan devised prior to making an offer, typically in negotiation or bidding contexts, to maximize successful outcomes.

Tender Offer

A public proposal made by a person or company to shareholders to buy shares of a corporation, typically at a premium over the market price.