When Firm a Acquired Firm B, No Incremental Value Was

question 134

Multiple Choice

When Firm A acquired Firm B, no incremental value was created but earnings per share increased. If the financial markets are astute, the price-earnings ratio of Firm A should ____ and the stock
Price of Firm A should _____.

• A) decrease; decrease
• B) decrease; increase
• C) decrease; remain constant
• D) increase; decrease
• E) increase; increase

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Definitions:

Macroevolution

Large-scale evolutionary changes that occur over geologic time, leading to the emergence of new species and diversification.

Phenotypic Changes

Alterations in the observable traits or characteristics of an organism, resulting from genetic expression or environmental influences.

Feathered Wings

Wings covered with feathers, characteristic of birds, that facilitate flight and insulation.

Postzygotic Barriers

Reproductive isolation mechanisms that occur after fertilization, preventing the development into fertile offspring.