Firm B Is Willing to Be Acquired by fiRm a at a Price

question 311

Multiple Choice

Firm B is willing to be acquired by firm A at a price of $34 a share in either cash or stock. The incremental value of the proposed acquisition is estimated at $80,000. What are the benefits of synergy associated with the acquisition of firm B by firm A?

• A) $36,000
• B) $40,000
• C) $80,000
• D) $120,000
• E) $156,000

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Definitions:

Agonist

A chemical or drug that binds to receptors in the body and activates them to produce a biological response.

Stimulates

To encourage something to grow, develop, or become active.

Pharmacodynamic

The branch of pharmacology concerned with the effects of drugs and the mechanism of their action in the body.

Capsules

Small, typically cylindrical, dosage forms designed to encapsulate medicines for oral administration, aiding in ease of consumption and absorption.