Consider a Case in Which Existing Shareholders Do Not Have

question 40

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.
• E)a management buyout.