International Financial Management
14th Edition
ISBN: 9780357130698
Author: Madura
Publisher: Cengage
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What are some defensive tactics that firms can use to resist hostile takeovers?
Suggest some ways in which firms have tried to avoid being part of a target takeover.
How does a hostile takeover affect the company’s stakeholder (shareholders, executives, employees, and society in general)? Is it usually beneficial or detrimental to these stakeholders? Why?
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- How to avoid rogue trading? What are the consequences of rougue trading?arrow_forwardFirms facing hostile takeovers often take actions to forestall the acquisition. For instance, a firm could borrow on terms that required immediate repayment if the firm is acquired or it could sell off undervalued assets to make itself a less desirable target. Such tactics are referred to as? Paul works for an investment bank in the corporate finance division. Along with the typical functions in his job role—such as finding a potential target company for a client which would add synergistic value to the client, finding a potential acquirer for a client, developing defensive tactics, establishing a fair value and financing operations—Paul also works with his team in conducting arbitrage operations. Based on your understanding of arbitrage operations complete the following sentence: In recent trade, Paul was assigned to buy 10% of a client’s shares from the open market at $45.50 per share and sell the shares at a price of $46.20 to a private investor, pocketing a return for his firm.…arrow_forwardIf a company decides to use FDI as its primary strategy to enter new foreign markets, a likely factor in their decisions is the comparatively low risk associated with FDI in comparison to other entry strategies. True falsearrow_forward
- How could the incentives of business profits create unwarranted influence in times of war?arrow_forwardDescribe insider trading. Why is it illegal?arrow_forwardforeign exchange broker earns income by charging fees for services rendered. speculating in the foreign exchange market. exploiting the bid–offer spread. engaging in riskless arbitrage operations.arrow_forward
- To minimize exposure to political risk, a multinational firm may establish a joint venture with a local entrepreneur or a group of multinationals, or A. purchase an insurance policy from the Overseas Private Investment Corporation (OPIC). B. purchase an insurance policy from the Foreign Credit Insurance Association (FCIA). C. hedge in the Eurodollar market. D. any combination of the options.arrow_forwardInvestors and MNCs exporting or importing goods and services or making foreign investments throughout the global economy are faced with an exchange rate risk,which can have severe financial consequences on firms profitability,cash flows,and their market value,if not managed appropriately. MNC's use a number of external techniques of risk(exposure)management and resort to contractual relationships outside thier companies in order to reduce (or redistribute)the risk of foreign exchange losses.What are the determinants of hedging currency risk or foreign exchange exposures which pose risks to MNC's cashflows,competitiveness,marker value and financial reporting.arrow_forwardWhat creates rogue traders?arrow_forward
- Entry modes for entering new countries vary in their degree of control. What does control mean? O The degree of risk a firm has in its foreign activities The degree of ownership a firm has in its foreign activities O The degree of profits a firm has in its foreign activities O The degree of influence a firm has in its foreign activitiesarrow_forwardWhat do you think risk managers are doing (or in the current coronavirus situation as well as the sanctions on trade with Russia?arrow_forwardAre poison-pill defenses ethical? If a potential acquirer buys company stock legally, thereby becoming a part owner of the company, should management be allowed to entrench itself against the wishes of this owner? Explain your answer.arrow_forward
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