When a firm purchases shares directly from a major shareholder it is also known as a(n) ________.
A) open market purchase
B) tender offer
C) targeted repurchase
D) greenmail

Question

Quizplus · Accepted Answer

When a firm purchases shares directly from a major shareholder, it is known as a targeted repurchase. This is different from an open market purchase, where the firm buys shares on the open market, and a tender offer, where the firm offers to buy back shares from all shareholders at a premium price. Greenmail is a term used to describe when a hostile acquirer buys a significant number of shares in a company and threatens to take over unless the company buys back the shares at a premium price.

When a Firm Purchases Shares Directly from a Major Shareholder