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Finance Flashcards

Finance 303: Final Exam

Proxy a document that gives a person or group the authority to act on behalf of another. It can transfer shareholder voting rights to management
Poison Pill A provision that management might include in the corporate charter that makes the firm less attractive to prospective acquirers. It allows the target firm’s shareholders to buy the firm’s additional shares at below-market prices, which increases the number of shares outstanding and thus makes the takeover expensive for the acquiring firm.
Preemptive right a provision that gives shareholders the right to buy new shares in any new share issuance in proportion to their existing stake in the company
Classified Stock To segment the rights to which certain common shareholders are entitled, companies often separate common equity into more than one class of shares
Statement Classified shares have super-voting rights, which give more control to a certain class of investors.
Statement A stock’s intrinsic value is based on the fundamental cash flows and the company’s risk

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