Consider a Case in Which Existing Shareholders Do Not Have

question 43

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)a leveraged buyout.
• B)a golden parachute.
• C)the free rider problem.
• D)a toehold.

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