Tom Copeland,Tim Keller,and Jack Morrin,on Their Book Valuation,Measuring and Managing

question 19

Multiple Choice

Tom Copeland,Tim Keller,and Jack Morrin,on their book Valuation,Measuring and Managing the Value of Companies,observed that acquirers paid too much for companies because of all but one of the following reasons:

• A)market potential greater than estimated.
• B)overoptimistic appraisal of market potential.
• C)overestimation of synergies.
• D)poor due diligence.
• E)overbidding.

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Definitions:

Nonzero Probabilities

This implies that events or outcomes have a likelihood greater than zero of occurring.

Disjoint Events

Two events that cannot occur at the same time, implying they have no outcomes in common.

P(B)

Represents the probability of the occurrence of event B in probability and statistics.

P(A|B)

Represents the probability of event A occurring given that event B has occurred.