Fundamentals of Corporate Finance
Fundamentals of Corporate Finance
11th Edition
ISBN: 9780077861704
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Bradford D Jordan Professor
Publisher: McGraw-Hill Education
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Chapter 26, Problem 9CRCT
Summary Introduction

To discuss: Whether it will make any sense for the management of a company, in which Person X has owned stock, to prefer the lower offer in the given situation and the influence of the lower offer towards the payment form.

Introduction:

The transfer of control of a company from one shareholder’s group to another is termed as takeover.

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6. IPO price stabilization Which of the following strategies can underwriters use to prevent institutional investors from flipping? Check all that apply. They can require an overallotment clause in the underwriting agreement of the IPO. They can agree to make more shares of future IPOS available to investors that hold on to the initial shares for a relatively long period of time. They can require a lockup clause in the underwriting agreement of the IPO. They can agree to sell the shares in the IPO at a lower price than suggested by their bookbuilding analysis.
QUESTION 43 If the bid fails in a hostile tender offer, what impact will it have on the market price?      A. Market price falls because the minority owner was unable to complete the offer   B. Market price stays the same because it is apparent that no one wants to buy the stock   C. Market price increases because the minority owner has signaled to the market that shares are worth  more   D. None of the above
Which one of the following is probably the most effective means of increasing investors' interest in an IPO?   Multiple Choice   Extending the lockup period   Issuing the IPO through a rights offering   Underpricing the IPO   Eliminating the quiet period   Eliminating the Green Shoe option
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