Which of the Following Statements Regarding Poison Pills Is FALSE

question 39

Multiple Choice

Which of the following statements regarding poison pills is FALSE?

• A)Companies with poison pills are harder to take over,and when they are taken over,the premium that existing shareholders receive for their stock is higher.
• B)Because a poison pill increases the cost of a takeover,all else equal,a target company must be in better shape to justify the expense of waging a takeover battle.
• C)Poison pills also increase the bargaining power of the target firm when negotiating with the acquirer because poison pills make it difficult to complete the takeover without the cooperation of the target board.
• D)By adopting a poison pill,a company effectively entrenches its management by making it much more difficult for shareholders to replace bad managers,thereby potentially destroying value.

Analyze the effects of supply and demand changes on market equilibrium prices and quantities.

Calculate equilibrium price in a market given supply and demand equations.

Identify examples and non-examples of markets.

Describe how changes in supply and demand impact market outcomes.

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Definitions:

Quadratic Model

A mathematical model that involves an equation of the second degree, typically representing a parabolic relationship between variables.

Predict

To declare or indicate in advance, especially on the basis of special knowledge, analysis or statistical methods.

Second-order Model

A statistical or mathematical model that includes terms up to the second degree, capable of describing systems with more complexity compared to first-order models.

Winning Team's Percentage

A metric that calculates the ratio of a team's number of wins to the total number of games played, expressed as a percentage.