Series 79 practice questioneasyAnti-Takeover Defenses
A poison pill is designed to prevent hostile takeovers primarily by:
- ADiluting the acquirer’s ownership upon triggering events✓ Correct answer
- BRequiring shareholder approval for significant transactions
- CInstalling a staggered board of directors
- DMandating golden parachutes for executives
Explanation
Why A — Diluting the acquirer’s ownership upon triggering events
A poison pill dilutes an acquirer’s ownership by allowing existing shareholders to buy additional shares at a discount if a threshold is crossed, deterring hostile bids. Other defenses function differently or more indirectly.
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