You Read a Story in the Newspaper Announcing the Proposed

question 43

Multiple Choice

You read a story in the newspaper announcing the proposed merger of Dell Computer and Gateway. The merger is expected to greatly increase Gateway's profitability. If you decide to invest in Gateway stock,you can expect to earn

• A)above average returns since you will share in the higher profits.
• B)above average returns since your stock price will definitely appreciate as higher profits are earned.
• C)below average returns since computer makers have low profit rates.
• D)a normal return since stock prices adjust to reflect expected changes in profitability almost immediately.

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Definitions:

Disaffirmance

The legal right of a party, usually a minor, to renounce or void a contract, thereby releasing them from any obligations.

Consideration

Consideration in a legal context refers to something of value that is exchanged between parties as part of a contract, necessary for the contract to be legally binding.

Chinese Law

A legal system derived from civil law, heavily influenced by Soviet Socialist law, that governs the People's Republic of China.

Minors

Individuals under the legal age of majority, typically under 18 years old, not yet granted the full legal rights of an adult.