Question 1

Greenmail is an attempt to stop a hostile takeover by offering to buy any stockholder's shares at a price above market.

Accepted Answer

A) True 
 B)False

Question 2

There is virtually no distinction between economic and commercial business failures.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is not a factor that makes valuing a target's stock difficult and imprecise?

Accepted Answer

A) It's hard for an acquirer to get an accurate forecast of the target's future cash flows. 
B) Terminal values vary dramatically in response to small changes in assumptions. 
C) The acquirer's management generally doesn't know anything about the target's line of business. 
D) Estimating a risk adjusted discount rate for the analysis is inherently imprecise.

Question 4

All of the following are defensive measures except:

Accepted Answer

A) black night. 
B) staggered board elections. 
C) super majority voting rules. 
D) poison pills.

Question 5

Activists maintain that they are different from corporate raiders and cause positive changes such as:

Accepted Answer

A) Increasing the stock price which benefits all stockholders ​ 
B) Saving the corporation money on executive privileges ​ 
C) Returning money to shareholders ​ 
D) All of the above​

Question 6

AMAY's mining division does not fit well strategically with the remainder of the firm. Conversely, the mining division would fit well with the mission of Nuccar Minerals. A good way for AMAY to divest of its mining unit is through:

Accepted Answer

A) consolidation. 
B) liquidation. 
C) sale for cash. 
D) spinoff.

Exam 17: Corporate Restructuring