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.

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Definitions:

Fraud Triangle

A model explaining the factors that cause an individual to commit fraud, including pressure, opportunity, and rationalization.

Opportunity

A set of circumstances that makes it possible to do something, especially in terms of making business decisions or investments that could lead to profit.

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been subtracted from revenue.

Earnings

The amount of profit that a company generates during a specific period, often reported as net income.