Under Which Set of Circumstances Would It Not Be Appropriate

question 27

Multiple Choice

Under which set of circumstances would it not be appropriate to assume the value the noncontrolling shares is the same as the controlling shares?

• A)The acquisition is for less than 100% of the subsidiary.
• B)The fair value of the of the noncontrolling shares can be inferred from the value implied by the acquisition price.
• C)Active market prices for shares not obtained by the acquirer imply a different value.
• D)The amount of the "control premium" cannot be determined .

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Definitions:

Hindsight Bias

The tendency to believe, after learning an outcome, that one would have foreseen it, often referred to as the "I-knew-it-all-along" phenomenon.

Overconfidence Bias

A cognitive bias which leads an individual to overestimate their knowledge, abilities, or control over situations.

Selection Bias

A type of bias caused by choosing non-random data for statistical analysis, which can cause the results to not be representative of the whole population.

Deductive Reasoning

A rational procedure in which an inference is derived from the harmony of multiple statements thought to be valid.