A Firm May Decide to Eliminate the Threat of a Takeover

question 83

Multiple Choice

A firm may decide to eliminate the threat of a takeover by a major shareholder by purchasing shares from him at a premium also known as a(n) ________.

• A) open market purchase
• B) tender offer
• C) targeted repurchase
• D) greenmail

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Definitions:

Interest Rate

The cost incurred, calculated as a fraction of the principal, for utilizing assets, charged by the lender to the borrower.

Banks

Financial institutions licensed to receive deposits and make loans, and offer various other financial services, such as wealth management and currency exchange.

Profits

The financial gain obtained when the revenues generated from business activities exceed the expenses, taxes, and costs incurred in producing those revenues.

Financial Markets

Marketplaces where individuals and entities can trade financial securities, commodities, and other fungible assets at prices determined by supply and demand.