The Shareholders of Firm a Have Offered One Million Shares

question 112

Multiple Choice

The shareholders of firm A have offered one million shares valued at $10 each to acquire firm B After the merger is announced, stock A trades for $9 per share.Which of the following statements is not correct?

• A)Firm A appears to have overbid for firm B
• B)The NPV of the merger may differ from expectations
• C)Shareholders of A absorb all additional "cost"
• D)A's stockholders are better off than if the merger were cash financed for $10 million

---

Definitions:

Void

A term applied to a contract that is not valid because its object is illegal or it has a defect that is so serious that it is not a contract.

Lease

(1) A transfer of the right to possess and use goods for a period of time in return for consideration. (2) The agreement between a landlord and a tenant that specifies the terms of a property rental.

Surrendering Property

The act of voluntarily giving up rights to property, often in a legal or financial context, such as in bankruptcy.

Writing

A type of documentation that shows contractual intent and satisfies the statute of frauds requirement.