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:

Government Revenue

The income received by the government from taxes and non-tax sources like charges for services and customs duties.

Price Ceiling

A government-imposed limit on how high a price of a good or service can be charged in the market.

Demand

The quantity of a product or service that consumers are willing and able to purchase at various prices during a given period.

Supply Conditions

Factors that affect the ability and willingness of producers to offer goods and services for sale, including technology, resource prices, and regulatory environment.