The Free-Cash-Flow Theory of Takeovers Predicts That

question 70

Multiple Choice

The free-cash-flow theory of takeovers predicts that:

• A)Firms without free cash flow will become the most common LBOs.
• B)Firms with free cash flow will continue to be the acquirers.
• C)Firms with excess cash do not have a tendency to use it wisely.
• D)The riskiest takeover candidates are those with large amounts of free cash flow.

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Definitions:

Classical Conditioning

The process of learning through which two stimuli are continually paired; a reaction that starts out being elicited by the second stimulus is in the end prompted by the sole presentation of the first stimulus.

Classical Conditioning

A teaching technique involving the connection between a stimulus from the surroundings and one that happens naturally.

US Immediately Follows CS

In classical conditioning, the unconditioned stimulus consistently and immediately follows the conditioned stimulus, establishing an association.

Predictive Signal

An indication or sign that precedes and suggests the probable occurrence of a future event or outcome.