If an Acquisition Does Not Create Value,then The

question 81

Multiple Choice

If an acquisition does not create value,then the:

• A) earnings per share of the acquiring firm must be the same both before and after the acquisition.
• B) earnings per share can change but the stock price of the acquiring company should remain constant.
• C) price per share of the acquiring company should increase because of the growth of the firm.
• D) earnings per share will most likely increase while the price-earnings ratio remains constant.
• E) price-earnings ratio should remain constant regardless of any changes in the earnings per sharE.

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Definitions:

Monthly Payments

Payments that are due every month, as in the case of a loan or lease.

Withdrawals

Acts of removing funds from a savings or investment account, which can impact the account's growth or income-producing ability.

Compounded Quarterly

The calculation of interest on the principal amount and any accumulated interest every three months.

Quarterly Withdrawals

The act of taking money out of an account or investment four times a year.