534 Final Exam Part 2
Question 1
Which of the following is NOT normally regarded as being a good reason to establish an
ESOP?
To enable the firm to borrow at a below-market interest rate.
To make it easier to grant stock options to employees.
To help prevent a hostile takeover.
To help retain valued employees.
To increase worker productivity.
Question 2
Which of the following is NOT normally regarded as being a barrier to hostile takeovers?
Targeted share repurchases.
Shareholder rights provisions.
Restricted voting rights.
Poison pills.
Abnormally high executive compensation.
Question 3
Which of the following statements is CORRECT?
Back before the SEC was created in the 1930s, companies would declare reverse splits in
order to boost their stock prices. However, this was determined to be a deceptive practice,
and it is illegal today.
Question 1
Which of the following is NOT normally regarded as being a good reason to establish an
ESOP?
To enable the firm to borrow at a below-market interest rate.
To make it easier to grant stock options to employees.
To help prevent a hostile takeover.
To help retain valued employees.
To increase worker productivity.
Question 2
Which of the following is NOT normally regarded as being a barrier to hostile takeovers?
Targeted share repurchases.
Shareholder rights provisions.
Restricted voting rights.
Poison pills.
Abnormally high executive compensation.
Question 3
Which of the following statements is CORRECT?
Back before the SEC was created in the 1930s, companies would declare reverse splits in
order to boost their stock prices. However, this was determined to be a deceptive practice,
and it is illegal today.
