TCO 4) One result of taking a firm private is.
1.the firm's stock is no longer available for purchase on the open market.
2.managers lose some control as the number of .stockholders increases.
3.the public image of the firm will suffer
4.the firm will have access to more capital.
And your answer is?
We'll be glad to check it for you.
managers lose some control as the number of .stockholders increases.
4.the firm will have access to more capital.
The correct answer is:
1. The firm's stock is no longer available for purchase on the open market.
To determine the answer, let's assess each option:
1. This option correctly states that when a firm is taken private, the company's stock is no longer available for purchase on the open market. In this case, the ownership of the company becomes concentrated among a smaller group of investors or shareholders.
2. This option is not accurate. When a firm is taken private, managers generally experience a reduction in the number of stockholders. Consequently, their control over the firm might actually increase as they deal with a smaller group of investors.
3. This option is not accurate. While the public image of a firm might undergo changes due to going private, it is not a direct result of taking the firm private. The impact on public image will depend on various factors specific to the company and the reasons behind the decision to go private.
4. This option is not accurate. Taking a firm private does not inherently provide the firm with access to more capital. Going private typically involves a shift in ownership structure and ownership concentration, which may or may not lead to increased capital availability.
In conclusion, the correct answer is option 1, as it accurately reflects one result of taking a firm private.