Which of the Following Statements Is False

question 184

Multiple Choice

Which of the following statements is false?

• A) Market values should be used to determine the value of a firm.
• B) In calculating the value of a merger or acquisition only incremental cash flows should be considered.
• C) The cost of capital for the target firm is generally considered to be the relevant discount rate associated with a merger or acquisition.
• D) Transaction costs should be included when calculating the value of a merger.
• E) There will typically be a gain in an acquisition if the target firm's management is better than the management of the acquiring firm.

---

Definitions:

Trading Investments

Assets acquired primarily for selling in the near term to generate profit from short-term price fluctuations.

Interest Income

Interest income is the revenue earned from depositing funds in interest-bearing accounts, securities, or investments, where the yield comes in the form of interest payments.

Bond Premiums

The amount by which the market price of a bond exceeds its principal amount or face value, usually occurring when the market interest rate is below the coupon rate.

Interest Income

Income earned from deposit accounts or investments through the receipt of interest payments.