In the Case of a Merger That Is Stock Financed

question 33

Multiple Choice

In the case of a merger that is stock financed, the assumed merger cost may be incorrect if the:

• A)Value of the acquired firm's shares changes after the merger announcement
• B)Value of the acquiring firm's shares changes after the merger announcement
• C)Long-term interest rates increase
• D)Merger is either horizontal or vertical

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Definitions:

General Ledger

A comprehensive record of all financial transactions that occur within a business, sorted by account.

T-account

A graphical representation of a ledger account that outlines the effects of transactions on a specific account, used in double-entry bookkeeping.

Transactions

Financial interactions or exchanges between two or more parties, often involving the transfer of goods, services, or funds.

Investing Activity

Refers to buying and selling long-term assets and other investments, a key part of a company's cash flow statement.