Which of the Following Statements Regarding Recapitalization as a Takeover

question 52

Multiple Choice

Which of the following statements regarding recapitalization as a takeover defense is false?

• A) Another defense against a takeover is a recapitalization, in which a company changes its capital structure to make itself less attractive as a target.
• B) Restructuring itself can produce efficiency gains, often removing the principal motivation for the takeover in the first place.
• C) By increasing leverage on its own, the target firm can reap the benefit of the interest tax shields.
• D) In many cases, a substantial portion of the synergy gains that an acquirer anticipates from a takeover are savings from a decrease in leverage as well as other cost reductions.

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Definitions:

TPS

Transaction Processing System; a computerized system that performs and records daily routine transactions necessary to conduct business.

Real Time

The processing of data or the delivery of information immediately after collection, without noticeable delay, allowing for immediate action or response.

Ziosk

A brand name for a tablet-like device used in restaurants that allows customers to order food, pay their bill, and entertain themselves while waiting.

Tips

Voluntary payments made to certain service workers in addition to the basic price for services rendered.