Consider a Case in Which Existing Shareholders Do Not Have

question 1

Multiple Choice

Consider a case in which existing shareholders do not have to invest time and effort, but still participate in the gains from a takeover, while the bidder who puts in the time and effort is forced to give up substantial profits. This situation is called ________.

• A) the free rider problem
• B) a toehold
• C) a leveraged buyout
• D) a freezeout merger