The Shareholders of a Target Firm Benefit the Most When

question 67

Multiple Choice

The shareholders of a target firm benefit the most when:

• A) An acquiring firm has the better management team and replaces the target firm's managers.
• B) The management of the target firm is more efficient than the management of the acquiring firm which replaces them.
• C) The management of both the acquiring firm and the target firm are as equivalent as possible.
• D) Their current management team is kept in place even though the managers of the acquiring firm are more suited to manage the target firm's situation.
• E) Their management team is technologically knowledgeable yet ineffectivE.

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Definitions:

Discount Bond

A bond that is sold for less than its face value.

Face Value

The nominal or dollar value printed on a security or financial instrument, such as a bond or stock certificate, representing its official worth or repayment value at maturity.

Yield-to-Maturity

The total return anticipated on a bond if it is held until its maturity date, incorporating both interest payments and the adjustment of the bond's value.

Semi-annual

Occurring twice a year; pertaining to events, reports, payments, or dividends that happen or are issued every six months.