Which of the following terms refers to buying out a hostile shareholder at a price far above the current price of the target company's stock in exchange for the hostile shareholder's agreement not to buy more shares for a period of time?
A) golden parachute
B) poison pill
C) porcupine provision
D) greenmail

Question

Quizplus · Accepted Answer

Greenmail is a term used when a hostile shareholder is bought out at a premium in exchange for not buying additional shares for a certain period of time. This is often done to avoid a hostile takeover. A golden parachute refers to a compensation package given to executives in the event of a merger or acquisition, while a poison pill is a defensive tactic used by a company to make itself less attractive to an acquiring company. A porcupine provision is not a commonly used term in finance.

Which of the Following Terms Refers to Buying Out a Hostile