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

A. consolidation.

B. parent-subsidiary takeover.

C. merger.

D. joint venture.

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

A. closing the business.

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

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

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

3. Company XYZ has 50,000 shares of outstanding stock and 500,0000 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:

A. greenmail.

B. the golden parachute.

C. the white knight.

D. asset lockup.

4. What is a tender offer?

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

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

C. 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.

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

5. 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:

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

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

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

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