The Term "Golden Parachute" Refers to

question 18

Multiple Choice

The term "golden parachute" refers to

• A) a clause requiring that huge dividend payments be made upon takeover.
• B) pay given to executives fired because of a takeover.
• C) financial inducements offered by a threatened firm to stop a hostile suitor from acquiring it.
• D) managers of a firm in a hostile takeover approaching a third party about making the acquisition.

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Definitions:

Accounting Profits

The total revenue of a business minus the explicit costs, reported on financial statements according to standard accounting practices.

Economic Profits

The disparity between total income and combined expenses, encompassing both out-of-pocket and hidden costs.

Economic Profits

The margin between an organization's complete earnings and its aggregate expenditures, covering both visible and hidden costs.

Implicit Costs

Implicit costs are the opportunity costs of using resources owned by the business for production instead of lending, selling, or renting them out.