Which One of the Following Statements Is Correct Concerning Acquisitions

question 329

Multiple Choice

Which one of the following statements is correct concerning acquisitions?

• A) If the acquisition is done on an all cash basis the shareholders of the target firm are excluded from any losses resulting from an unsuccessful merger.
• B) Acquisitions done on an all cash basis are generally considered non-taxable events.
• C) Acquisitions done utilizing shares of voting common stock have no effects on the control of the post-merger firm.
• D) If the acquisition is done on an all cash basis the shareholders of both the acquirer and the acquired firm will gain from any realized future benefits of the merger.
• E) The capital structure of the post-merger firm will be the same whether an acquisition is done on a cash basis or on a stock basis.

---

Definitions:

Long-term Investments

Assets that a company intends to hold for more than one fiscal year, such as stocks, bonds, or real estate, with the expectation of generating long-term benefits.

Accrued Interest

Interest that has been earned but not yet paid or received in cash.

Semiannual Interest

Interest calculated or paid twice a year on loans, bonds, or savings accounts.

Accrued Interest

Interest that has been generated but remains unpaid.