A Hostile Takeover Defense Wherein the Target Firm Makes Its

question 114

Multiple Choice

A hostile takeover defense wherein the target firm makes its stock less attractive to a potential acquirer is called:

• A) greenmail.
• B) a standstill agreement.
• C) crossing the palm with silver.
• D) a poison pill.

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Definitions:

Market Value

The existing buying or selling price of a service or asset in a trading environment.

Warrant

A financial instrument that gives the holder the right, but not the obligation, to buy a company's stock at a specified price before a certain date.

Convertible Bond

An investment vehicle that permits conversion into a fixed number of the issuing company's equity shares at select moments over its lifespan, usually upon the decision of the person owning the bond.

Arbitrage

The practice of buying and selling equivalent assets in different markets to take advantage of a price difference.