Assume the Shareholders of a Target Firm Benefit from Being

question 35

Multiple Choice

Assume the shareholders of a target firm benefit from being acquired in a stock transaction. Given this, these shareholders are most apt to realize the largest benefit if the:

• A) acquiring firm has the better management team and replaces the target firm's managers.
• B) management of the target firm is more efficient than the management of the acquiring firm which replaces them.
• C) management of both the acquiring firm and the target firm are as equivalent as possible.
• D) current management team of the target firm is kept in place even though the managers of the acquiring firm are more suited to manage the target firm's situation.
• E) new management team is technologically knowledgeable but yet ineffective.

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Definitions:

Arousal

A physiological and psychological state of being awake or reactive to stimuli, often associated with increased cognitive activity and physical readiness.

Self-actualization

Fulfilling one's capabilities and realizing personal potential, regarded as an essential urge or demand within each person.

Abraham Maslow

A psychologist best known for creating Maslow's hierarchy of needs, a theory in psychology about human motivation based on prioritized needs.

Belonging

The feeling of being accepted and included within a group or community, contributing to a person's sense of identity and emotional well-being.