Which One of the Following Statements Is Correct

question 18

Multiple Choice

Which one of the following statements is correct?

• A) An increase in the earnings per share as a result of an acquisition will increase the price per share of the acquiring firm.
• B) The price-earnings ratio must remain constant as a result of an acquisition that fails to create value.
• C) If firm A acquires firm B then the number of shares in AB will equal the number of shares of A plus the number of shares of B.
• D) The price-earnings ratio can decrease even when the net present value of a merger is equal to zero.
• E) Diversification is one of the greatest benefits derived from an acquisition.

---

Definitions:

Role

A set of expected behaviors, rights, obligations, and norms associated with a social position or status.

Status

A term referring to the relative social, professional, or other standing of someone or something.

Superego

In psychoanalytic theory, the part of the personality that acts as a moral center, imposing ethical standards and social conformity.

Unconscious

The part of the mind that contains thoughts, memories, and desires not within current conscious awareness.