If the P/E Paid Is Greater Than the P/E of the Acquiring

question 112

Multiple Choice

If the P/E paid is greater than the P/E of the acquiring company, the effect on the earnings per share of the acquired company will be

• A) positive.
• B) uncorrelated.
• C) negative.
• D) neutral.

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Definitions:

Deductibles

The amount an insured person is required to pay out of pocket before an insurance company covers any expenses.

Co-Payments

Fixed amounts that an insured person is required to pay at the time of receiving medical service, with the balance covered by their health insurance.

Third-Party Liability Insurance

Insurance coverage meant to protect against claims made by a third party for damages or injuries that the policyholder is responsible for.

Tort Liability

The legal responsibility that arises from the commission of a tort, which is an act or omission that gives rise to injury or harm to another and amounts to a civil wrong for which courts impose liability.