Which of the Following Statements Is FALSE

question 33

Multiple Choice

Which of the following statements is FALSE?

• A)SEC rules make it difficult for investors to buy much more than about 10% of a firm in secret.After an acquirer acquires such an initial stake in the target,called a toehold,they would have to make their intentions public by informing investors of his large stake.
• B)With the availability of both the freezeout merger and the leveraged buyout as acquisition strategies,most of the value added accrues to the acquiring shareholders.
• C)The laws on tender offers allow the acquiring company to freeze existing shareholders out of the gains from merging by forcing non-tendering shareholders to sell their shares for the tender offer price.
• D)Premiums in LBO transactions are often quite substantial-while they can avoid the free-rider problem acquirers must still get board approval to overcome other defenses such as poison pills,as well as outbid other potential acquirers.

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Definitions:

Field Warehouse

A secured area within a business's premises that is operated by an independent warehousing company for storing pledged goods under a field warehousing agreement.

Financing Inventory

The practice of using borrowed funds or other financial strategies to purchase goods intended for sale.

Pledged Property

Property that a borrower provides to a lender as security for a loan, ensuring that the lender has a claim to the property if the loan is not repaid according to the agreed terms.

Financing Agreement

A contract in which one party provides money, goods, or services to another party in exchange for eventual repayment or other financial terms.