The process by which two or more corporations combine in such a way that only one of the original corporations continues to exist after the combination is called a:

poison pill.

greenmail takeover.

share exchange.

merger.

Assessment question

The process by which two or more corporations combine in such a way that none of the original corporations continue to exist and a new corporation is formed from the combination is called a:

consolidation.

merger.

parent-subsidiary takeover.

joint venture.

Assessment question

The first step in terminating a corporation is:

the officers winding up business.

paying all debts and outstanding taxes.

the board of directors adopting a resolution to dissolve the corporation.

closing all bank accounts.

Assessment question

The "poison pill" takeover defense, prevents a hostile takeover by:

making the takeover prohibitively expensive after the target corporation provides stockholders the right to purchase additional shares at low prices.

closing the business.

the target corporation attempting its own takeover of the acquiring corporation.

soliciting a third-party corporation to make a better offer.

Assessment question

Company XYZ has 50,000 shares of outstanding stock and 50,0000 shares in reserve. The share price of the stock has been steady at $2.00 per share, but upon the threat of a hostile takeover Company XYZ offers to buy back all outstanding shares at $4.00 per share. This is known as:

the golden parachute.

greenmail.

asset lockup.

the white knight.

Assessment question

A hostile takeover defense known as asset lockup or crown jewel, occurs when:

the acquiring corporation only acquires a portion of the target company.

the target corporation terminates all their current managers to prevent approval of a takeover.

the target corporation solicits a third corporation to make a better offer.

the target corporation sells off the asset(s) most attractive to the acquiring corporation.

Assessment question

The power to merge or consolidate companies is controlled by:

local ordinances.

administrative regulations.

statutory law.

no law.

Assessment question

What is a tender offer?

The shareholders of a target corporation form alliances and via shareholder voting eliminate the board of directors so that they may offer the positions to members of the acquiring corporation.

An acquiring corporation asks shareholders of the target corporation to offer their stock for sale.

The shareholders of the acquiring corporation offer their shares for sale to shareholders of the target corporation.

The shareholders of the acquiring corporation purchase all of the assets of the target corporation.

Assessment question

Three motivations behind a hostile takeover include: (Select three)

increasing the leverage position of the acquiring company

increasing profits by having the target corporation buy back its stock at a premium

acquiring a particular asset of the target corporation.

reducing competition by dismantling the target corporation

Assessment question

During a hostile takeover attempt the board of directors of the target corporation blocked the attempt, however, shareholders who would have received a premium price for their stock are angry and sue. The courts will use:

the business judgement rule to determine if the directors acted reasonably.

the rule of reason to determine if the takeover made more financial sense to a greater number of people.

the rational basis test to determine if the block was the best course of action.

intermediate scrutiny to determine if it was the best course of action.

Which of the following is included in the definition of a security under the Securities Act of 1933? Choose 3 answers.

an interest in real estate

publicly traded stocks and bonds

an investment contract that meets the Howey test

stock options, puts, and calls

Assessment question

The Securities and Exchange Commission (SEC) was established to perform which of the following functions? Choose 3 answers.

regulating the securities market

protecting investors from fraud and misrepresentation in securities transactions

regulating efforts to raise capital by public companies, but not private companies

enforcing securities laws

Assessment question

A corporate officer who buys or sells his or her company's stock based on non-public information may be committing which type of securities fraud?

Ponzi scheme

misappropriation

embezzlement

insider trading

Assessment question

The Sarbanes-Oxley Act impacted corporate governance in which of the following ways? Choose 3 answers.

mandated internal controls for financial reporting

enhanced penalties for securities fraud

required registration of private company stock

increased corporate officer accountability

Assessment question

The Securities Exchange Act of 1934 controls the public trading of stocks in which of the following ways? Choose 2 answers.

by requiring annual disclosures of financial information

by requiring public companies to file one initial disclosure of financial information

by requiring private companies with over 200 employees to register their stock

by creating the Securities and Exchange Commission (SEC)

Assessment question

Blue sky laws apply to what type of securities transaction?

state-regulated securities offerings

sales of stocks from fictitious companies

stock offerings that exceed $1,000 per share

stocks traded on a national stock exchange

Assessment question

Which of the following securities are exempt from registration under the Securities Act of 1933? Choose 3 answers.

securities issued by a corporation when the company has issued less than $70 million in securities in the past 12 months

federal government bonds

tax-exempt bonds issued by a charitable organization

a corporate promissory note with a term of 9 months or less

Assessment question

A debt issued by a company as a negotiable instrument with a term of 9 months or less is a security that is exempt from registration and is called:

a short-swing trade.

a short-term offering.

short-term private placement.

short-term commercial paper.

Assessment question

In addition to describing the securities being offered for sale, a registration statement must meet which of the following requirements? Choose 3 answers.

It must be mailed to all investors.

It must be filed with the Security and Exchange Commission (SEC) online.

It must state how the corporation intends to use the proceeds from the sale of its securities.

It must contain specific information about the company's management, assets, liabilities, and risk factors.

Assessment question

Which of the following are among the five periods identified by the Securities and Exchange Commission (SEC) rules in the registration process? Choose 2 answers.

a waiting period

a prospectus period

a pre-filing period

a selling period