In the Event That Active Corp

question 44

Multiple Choice

In the event that Active Corp., which has a low P/E ratio, acquires Basic Corp., which has a higher P/E ratio, we could be assured that one of the following would occur, with everything else being equal. Which one would occur?

• A) Active Corp. will have an immediate increase in EPS.
• B) Active Corp. will have an immediate decrease in EPS.
• C) Active Corp. will have an immediate increase in the growth rate of EPS.
• D) Active Corp. will have an immediate decrease in the P/E ratio.

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Definitions:

Postpurchase Stage

The phase after buying a product or service where customers evaluate their purchase experience and form opinions that can impact future behavior.

Consumer Purchase Decision Process

The stages a consumer goes through when deciding to buy a product, typically including need recognition, information search, evaluation, purchase, and post-purchase evaluation.

Sales Promotion

Marketing activities—other than personal selling, advertising, and public relations—that stimulate consumer purchasing and dealer effectiveness, such as coupons, samples, and contests.

Coupons

Vouchers or codes offering a discount or rebate on a particular product or service.