CFA Practice Question

There are 233 practice questions for this study session.

CFA Practice Question

Which statement is false?
A. If two firms cross-hold each other, it is difficult to displace the management in one corporation without the consent of the other.
B. Any shareholder that owns over 50% of the shares of a firm is a controlling shareholder.
C. Activist shareholders can make management work harder.
Explanation: Statement B is false. This is not necessarily true, due to the separation of ownership and control.

Statement A is true. Cross-holding is a situation in which one publicly-traded company owns stock in another publicly-traded company.

Statement C is also true. Activist shareholders often have the ability to hold management's feet to the fire and demand results. They can motivate management to try to find ways to enhance shareholder value.

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