A Company May Purchase Some of the Assets of Another

question 12

Multiple Choice

A company may purchase some of the assets of another corporation. Which of the following are true?

• A) Shareholders must vote on any acquisition of more than 33% of corporate assets by another corporation.
• B) Shareholders must vote on any acquisition of more than 66% of corporate assets by another corporation.
• C) The acquiring company can choose which assets it wishes to purchase, subject to no statutory restrictions, but can only purchase assets the other company wishes to sell.
• D) b and c
• E) After selling more than 50% of its assets, the selling company ceases to exist legally.

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Definitions:

Present Value

The present value of a future amount of money or series of cash flows using a predetermined rate of return.

Perpetuity

A financial term for a stream of cash payments that continue indefinitely.

Semi-Annually

A term indicating something occurs twice a year.

Endowment Fund

A financial asset, often in the form of a donation to institutions, where the principal remains intact and only the investment income is used.