Greenmail refers to the practice of a company purchasing its stock, usually at a high price, from:
A) Small shareholders who are happy with performance of the firm
B) A hostile shareholder who threatens to take over the firm
C) Large shareholders who are happy with performance of the firm
D) None of the above

Question

Quizplus · Accepted Answer

Greenmail is a practice in which a company buys back its stock at a premium price from a hostile shareholder who is attempting to take over the company. This is done to prevent the hostile takeover from occurring and to retain control of the company. The other options do not involve a hostile shareholder or a threat to take over the company.

Greenmail Refers to the Practice of a Company Purchasing Its