Which of the Following Is Not True of Share Exchange

question 59

Multiple Choice

Which of the following is not true of share exchange ratios?

• A) They are used to value target firms
• B) They are used to determine the number of new shares that must be issued by the acquirer in a share for share exchange
• C) They provide useful information to determine the post transaction ownership distribution of the combined firms
• D) They are defined as the offer price divided by the acquirer share price
• E) The share exchange ratio can be less than, equal to, or greater than one

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Definitions:

Research Costs

Expenditures related to activities undertaken to gain new knowledge or understanding to develop new products, processes, or services; often a significant part of a company's innovation efforts.

Capitalized

In accounting, this term refers to recording an expense or cost as a capital asset on a balance sheet, rather than as an expense on the income statement.

Tangible Asset

Physical assets that can be touched and have a finite monetary value, such as buildings, machinery, and equipment.

Property, Plant, Equipment

Property, plant, and equipment (PP&E) are long-term tangible assets that are used in the operations of a business and are subject to depreciation.