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Question 1
A "shareholder rights plan" is otherwise referred to as:
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Incorrect!
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Incorrect!
Correct A shareholder rights plan, known more commonly by its colloquial name ' a 'poison pill' ' is a plan adopted by the company's board with the initial intent of thwarting a buyer from acquiring too large a percentage of the company's stock.
Incorrect! A shareholder rights plan, known more commonly by its colloquial name ' a 'poison pill' ' is a plan adopted by the company's board with the initial intent of thwarting a buyer from acquiring too large a percentage of the company's stock.
Correct
Incorrect!
Question 2
Poisoned, Inc. has just adopted a shareholder rights plan. It is likely that the markets might choose to:
Correct It has been statistically proven that the adoption of a poison pill will have the effect of lowering the share price of the company's stock. The reason for this is that the market often interprets such a move as suggestive of the fact that management is attempting to entrench its position, rather than make the company readily available for a takeover offer that shareholders might approve.
Incorrect! It has been statistically proven that the adoption of a poison pill will have the effect of lowering the share price of the company's stock. The reason for this is that the market often interprets such a move as suggestive of the fact that management is attempting to entrench its position, rather than make the company readily available for a takeover offer that shareholders might approve.
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Incorrect!
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Incorrect!
Correct
Incorrect!
Question 3
RigaMortis, Inc. has adopted a "dead hand" poison pill. It is most likely the case that:
Correct The wording of this question attempts to mask a rather straightforward question. Namely, what is a 'dead hand' poison pill, and where is it legal' The answer to these questions is that a dead hand poison pill is a pill where only the board members who actually place the plan on the company's shares are the ones who can remove the plan. Such a plan is illegal in all states except for Pennsylvania and shareholders and the market would likely despise such a plan.
Incorrect! The wording of this question attempts to mask a rather straightforward question. Namely, what is a 'dead hand' poison pill, and where is it legal' The answer to these questions is that a dead hand poison pill is a pill where only the board members who actually place the plan on the company's shares are the ones who can remove the plan. Such a plan is illegal in all states except for Pennsylvania and shareholders and the market would likely despise such a plan.
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Incorrect!
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Incorrect!
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Incorrect!
Question 4
Z Corp. is attempting a takeover of Y Corp. Y Corp. has a poison pill in place. Before Z Corp. goes too far in the acquisition, it will be forced to:
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Incorrect!
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Incorrect!
Correct In a transaction where a target company has a poison pill, it is simply a matter of time before the acquiring company is forced to speak with management of the target firm and discuss the removal of the pill. Ultimately, the decision to remove the pill rests solely in the hands of the target company's board. Thus, the pill works as an effective means of bringing both parties to the negotiating table whether they want to be there or not.
Incorrect! In a transaction where a target company has a poison pill, it is simply a matter of time before the acquiring company is forced to speak with management of the target firm and discuss the removal of the pill. Ultimately, the decision to remove the pill rests solely in the hands of the target company's board. Thus, the pill works as an effective means of bringing both parties to the negotiating table whether they want to be there or not.
Correct
Incorrect!
Question 5
K Corp. is attempting to acquire P Corp. K has been actively acquiring P's stock for the last two months and has managed to take quite a large position. However, without realizing it, K has acquired a position so large that it has inadvertently triggered P's poison pill. The result to K is that:
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Incorrect!
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Correct What exactly would happen on the triggering of a poison pill is anybody's guess. The reason for this is it has simply never happened in the history of modern business practice. However, in theory, the triggering of the pill could result in a situation where massive numbers of shares are issued to the outstanding shareholders, diluting down the value of the shares purchased by the acquirer and possibly those held by other shareholders.
Incorrect! What exactly would happen on the triggering of a poison pill is anybody's guess. The reason for this is it has simply never happened in the history of modern business practice. However, in theory, the triggering of the pill could result in a situation where massive numbers of shares are issued to the outstanding shareholders, diluting down the value of the shares purchased by the acquirer and possibly those held by other shareholders.