A Fairness Opinion Is Used Most Often When

question 31

Multiple Choice

A fairness opinion is used most often when:

• A)An unsolicited hostile tender offer is received from a potential acquirer who owns no stake in the target firm.
• B)A controlling shareholder seeks approval for an amalgamation.
• C)Determining whether the exchange ratio in a stock swap transaction is appropriate.
• D)None of the above.

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Definitions:

Working Capital

The gap between a firm's present assets and liabilities, showing how liquid it is in the short run.

Investment Project

An investment project represents a series of cash inflows and outflows aimed at generating a return over time, typically involving the purchase of assets or investment in ventures.

Discount Rate

In DCF evaluations, the applied rate to ascertain the contemporary value of expected future cash inflows.

Net Present Value

The difference in now-value of cash inflow versus outflow throughout a definite timeline.