When Conducting Shareholder Value at Risk (SVAR)analysis for Acquisitions, It

question 79

Multiple Choice

When conducting shareholder value at risk (SVAR) analysis for acquisitions, it is found that:

• A)Acquiring firms that use cash bear all of the risk of the acquisition, while the risk in acquisitions using share swaps is borne by both sets of shareholders.
• B)Acquiring firms that use stock swaps bear all of the risk of the acquisition, while the risk in acquisitions using cash is borne by both sets of shareholders.
• C)The risk of an acquisition is always borne equally between the acquiring firm and target firm shareholders.
• D)None of the above.

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Definitions:

Revenues

Revenue that comes from regular business activities, factoring in discounts and allowances for products that are returned.

Expenses

The outflows or using up of assets or incurring of liabilities during a period from delivering goods, rendering services, or carrying out other activities that constitute the entity’s ongoing major operations.

FOB Shipper's Dock

A shipping term indicating that the buyer assumes responsibility for the goods once they are shipped, and the goods are considered delivered at the shipper's dock.

Raw Materials

Basic materials that are used in the production process to create goods and products.