Firms facing hostile takeovers often take actions to forestall the acquisition.
For instance, a firm could borrow on terms that required immediate repayment if the firm is acquired or it could sell off undervalued assets to make itself a less desirable target. Such tactics are referred to as?
Paul works for an investment bank in the
Based on your understanding of arbitrage operations complete the following sentence:
In recent trade, Paul was assigned to buy 10% of a client’s shares from the open market at $45.50 per share and sell the shares at a price of $46.20 to a private investor, pocketing a return for his firm. Paul was involved in?
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- It is generally argued that the takeover constraint : Deters management from engaging in opportunistic behavior. Deters management from considering acquiring other companies. Deters management from declaring dividends. Deters management from increasing a firm’s level of borrowing.arrow_forwardQuickBank has decided to lower the interest rate it charges on business loans in order to attract more business. It has succeeded in boosting the number of loan applications, but it finds that many of the applicants turn out to be very poor credit risks. This illustrates the problem known as adverse selection moral hazard the principal-agent porblem diversificationarrow_forward
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