AInc Is Contemplating a Business Combination with B Inc

question 24

Multiple Choice

AInc. is contemplating a Business combination with B Inc. However, A Inc.'s management is uncertain as to whether it should purchase B's assets or a majority of B's voting shares. The fair market values of B's assets far exceed their book values. A's management should be advised that IN MOST CASES:

• A) the purchase of B's shares would likely be the cheaper method of acquiring control. However, it would be less advantageous to the consolidated entity from a Tax standpoint.
• B) the purchase of B's shares would likely be the cheaper method of acquiring control. It would also be more advantageous to the consolidated entity from a Tax standpoint.
• C) the purchase of B's shares would likely be the costlier method of acquiring control. However, it would be more advantageous to the consolidated entity from a Tax standpoint.
• D)the purchase of B's shares would likely be the costlier method of acquiring control. It would also be less advantageous to the consolidated entity from a Tax standpoint.

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Definitions:

Neuroticism

A personality trait characterized by anxiety, fear, moodiness, worry, envy, frustration, jealousy, and loneliness.

Reciprocal Determinism

Reciprocal Determinism is a concept introduced by Albert Bandura which posits that a person's behavior is influenced by personal factors and their environment, and these factors influence each other.

Operant Conditioning

A method of learning that employs rewards and punishments for behavior, emphasizing the role of reinforcement in shaping actions.

Self-Actualized

The state in which an individual achieves their fullest potential, including creative expression, quest for spiritual enlightenment, pursuit of knowledge, and the desire to give to society.