Which One of the Following Statements Is TRUE

question 34

Multiple Choice

Which one of the following statements is TRUE?

• A) shareholders benefit when the company is acquired because they usually receive a higher price for their shares
• B) anti-takeover charter provisions are good for shareholders because they prevent a raider from stealing the company for a below-market price.
• C) shareholders want to prevent takeovers because they don't want the company purchased out from under them.
• D) a shareholder rights provision encourages takeovers because shareholders have the right to approve the takeover if the terms are good.
• E) a classified board is one in which the board members serve anonymously.

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Definitions:

Cash Flows

The movement of money into and out of a business, project, or financial product, considered essential for assessing the health and sustainability of an entity.

Return on Investment

A financial metric used to evaluate the efficiency or profitability of an investment, calculated by dividing the profit from an investment by the cost of the investment.

Capital Budgeting

The process businesses use to evaluate and select long-term investments such as new machinery, replacement machinery, new plants, new products, and research development projects.

Time Value

The concept that money available at the present time is worth more than the identical sum in the future due to its potential earning capacity.