One of the Effects of a Merger That Can Easily

question 335

Multiple Choice

One of the effects of a merger that can easily mislead investors into overvaluing a firm is the:

• A) Appearance of earnings per share growth when no such growth exists.
• B) Change in the number of shares outstanding in an all cash merger.
• C) Increase in total assets as a result of goodwill recognition under the pooling of interest accounting system.
• D) Change in the total value of a firm under the pooling of interest accounting system.
• E) Increase in cash flows due to the additional leverage required to fund the acquisition.

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Definitions:

Ovum

The female reproductive cell or egg, which can fuse with a male sperm cell to form a new organism.

Female Sex Cell

An egg or ovum, which is the reproductive cell produced by females that, when fertilized by a male sperm cell, can develop into a new organism.

Germinal

Pertaining to the earliest stage of development in organisms, or related to the generation of something new.

Placenta

An organ that develops in the uterus during pregnancy, providing oxygen and nutrients to the growing baby and removing waste products.