A Inc Is Contemplating a Business Combination with B Inc

question 48

Multiple Choice

A Inc. is contemplating a Business combination with B Inc. However, A Inc.'s management is uncertain as to whether it should purchase B's assets or a majority of B's voting shares. The fair market values of B's assets far exceed their book values. A's management should be advised that IN MOST CASES:

• A) A purchase of B's shares would likely be the cheaper method of acquiring control. However, it would be less advantageous to the consolidated entity from a Tax standpoint.
• B) A purchase of B's shares would likely be the cheaper method of acquiring control. It would also be more advantageous to the consolidated entity from a Tax standpoint.
• C) A purchase of B's shares would likely be the costlier method of acquiring control. However, it would be more advantageous to the consolidated entity from a Tax standpoint.
• D) A purchase of B's shares would likely be the costlier method of acquiring control. It would also be less advantageous to the consolidated entity from a Tax standpoint.

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Definitions:

Full Range Model

Refers to a leadership model that specifies a range of leadership behavior from transactional through transformational, focusing on the full scope of leadership actions.

Kouzes And Posner

James Kouzes and Barry Posner, researchers and authors known for their work on leadership practices and principles, notably the Five Practices of Exemplary Leadership.

Transactional Leadership

A leadership style based on exchanges between leader and followers, where followers are rewarded for meeting specific goals or performance criteria.

Motivation

The process that initiates, guides, and maintains goal-oriented behaviors. It is what causes us to act.