According to the Free-Cash-Flow Theory of Takeovers,postmerger Gains in Market

question 95

Multiple Choice

According to the free-cash-flow theory of takeovers,postmerger gains in market value represent:

• A) an illogical assessment of earnings prospects.
• B) the remaining costs of the merger.
• C) the present value of free cash flow that will no longer be misused.
• D) losses experienced by arbitrageurs and other speculators.

---

Definitions:

Drive-Reduction Theory

A theory in psychology that explains motivation as being rooted in biological needs that drive behavior towards reducing or eliminating those needs.

Behavioral-Learning Theory

A theory that emphasizes learning through interactions with the environment and the association between stimuli and responses.

Separation Anxiety

The distress that babies show when the person to whom they are attached leaves.

Stranger Wariness

A developmental phase in infants where they show anxiety or fear towards unfamiliar people.