The Most Correct Method of Valuing a Merger Candidate Is

question 2

Multiple Choice

The most correct method of valuing a merger candidate is ____.

• A) adjusted book value method
• B) discounted cash flow method
• C) pooling of interests method
• D) comparative price-earnings ratio method

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Definitions:

Spot Exchange Rate

The present rate at which one can purchase or sell a currency for immediate transfer.

Forward Exchange Rate

A contractually fixed exchange rate for the future exchange of currencies at a specified date, used to hedge against foreign exchange risk.

Arbitrage

The simultaneous purchase and sale of the same assets in different markets to exploit price differences for a profit.