Which of the Following Statements Is FALSE

question 34

Multiple Choice

Which of the following statements is FALSE?

• A)Once the acquirer has completed the valuation process,it is in the position to make a tender offer- that is,a public announcement of its intention to purchase a large block of shares for a specified price.
• B)If we view the pre-bid market capitalization as the stand-alone value of the target,then from the bidder's perspective,the takeover is a positive-NPV project only if the synergies created do not exceed the premium it pays.
• C)Purchasing a corporation usually constitutes a very large capital investment decision,so it requires a more accurate estimate of value that includes careful analysis of both operational aspects of the firm and the ultimate cash flows the deal will generate.
• D)A stock-swap merger is a positive-NPV investment for the acquiring shareholders if the share price of the merged firm (the acquirer's share price after the takeover)exceeds the premerger price of the acquiring firm.

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Definitions:

Excitation Transfer

A psychological process where arousal from one situation intensifies the reaction to a subsequent, unrelated event.

Physiologically Arousing

Events or stimuli that lead to an increase in physical or emotional activation.

Affect Balance

The ratio of positive to negative emotional experiences in one's life.

Positive Emotional Experiences

Occurrences that induce feelings of happiness, joy, or other pleasurable emotions.