In a Merger with an Exchange of Stock, When the Premerger

question 36

Multiple Choice

In a merger with an exchange of stock, when the premerger prices are used to calculate the exchange ratio, the true cost of the merger:

• A) is less than the number of shares received times the original market price.
• B) is equal to the number of shares received times the original market price.
• C) is greater than the number of shares received times the original market price.
• D) Unchanged from the premerger value.