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Quiz: Quiz #9&10 (10 points) - Due Week 12 Submit This Question: 1 pt 6 of 10 (9 complete) This Quiz: 10 pts pos Question Help How does a toehold help overcome the free rider problem? (Select the best choice below.) O A. Since the free riders gain the full amount of the value improvement on the shares acquired as a toehold, the free riders are likely to sell their shares to the acquirer, allowing the takeover to go forward. O B. Free riders usually acquire a toehold in order to give an incentive for an acquirer to take over the remainder of the company and provide value-added improvements. O C. Since the acquirer gains the full amount of the value improvement on the shares acquired as a toehold, a toehold provides an incentive to undertake the acquisition, even if the acquirer must pay a price equa to the with-improvement value for the rest of the shares. D. Once the acquirer has a toehold, free riders no longer can make as much money as they would have and are more likely to tender their shares to the acquirer. ? Click to select your answer.i Question Help What inherent characteristic of corporations creates the need for a system of checks on manager behavior? (Select the best choice below.) O A. Corporate managers are by nature greedy and cannot be trusted in any way. Therefore, a system of checks, created by the Board of Directors, is normally instituted to control managerial behavior. O B. The best method of reducing conflicts of interest between shareholders and corporate managers is to allow the shareholders the ability to run the corporation themselves. It is more efficient and provides a drastic reduction in conflicts of interest. O C. The corporation allows for the separation of management and ownership. Thus, those who control the operations of the corporation and how its money is spent are not the same who have invested in the corporation. This creates a clear conflict of interest and this conflict between the investors and managers creates the need for investors to devise a system of checks on managers-the system of corporate governance. D. There really is no need to have a system of corporate governance. If shareholders are not satisfied with the management of a company they can simply sell their shares in that company. Click to select your answer. MacBook Air