Which of the Following Statements Is Most CORRECT

question 35

Multiple Choice

Which of the following statements is most CORRECT?

• A) Firms that are acquired usually have a market price below book value before the merger offer is made. However, once the initial offer is made, the price can rise above book value, but the purchase price, especially in large acquisitions, generally remains within 20% of book value.
• B) When Texaco purchased Getty Oil, many financial analysts felt that the deal made sense because it increased Texaco's market share and expanded its shrinking oil reserves. This merger exemplified the belief among the natural resource companies that buying reserves through acquisitions was less costly than exploring and finding them in the field.
• C) When Mobil Oil Company tried to acquire Conoco, which was another oil company, stockholders were concerned that the U.S. Justice Department would try to block the merger because it would lessen competition. Thus, antitrust considerations affected this proposed horizontal merger.
• D) Answers b and c are correct.
• E) All of the statements above are false.

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Definitions:

Rotor

The rotating part of an electrical or mechanical machine, such as the rotating shaft in a motor or generator.

Inductive Compensation

A method of connecting the compensating windings in a universal motor.

Universal Motor

A type of motor that can be operated on AC or DC power.

AC

Alternating Current refers to an electrical current that periodically changes its direction of charge flow.