When One Company Offers a Large Premium for Another Company,most

question 9

True/False

When one company offers a large premium for another company,most of the upward movement in share price occurs after the public announcement of the merger offer and thus offers the best opportunity for profit to small investors.

---

Definitions:

Fine

A monetary penalty imposed by an authority on individuals or organizations for violations of legal rules.

Endowment Effect

The phenomenon where individuals value an owned item more than a similar item they do not own.

Gains

An increase in wealth, utility, or value resulting from an economic transaction or activity.

Losses

The shortfall that occurs when total costs exceed total revenues in a business operation, resulting in negative profit.