Selling Shareholders Who Are Offered Cash in a Merger May

question 87

Multiple Choice

Selling shareholders who are offered cash in a merger may be willing to part with the shares they hold because:

• A) the offered shares may be less marketable.
• B) a merger can create improved financing posture as a result of expansion in size.
• C) they can attain a lower degree of market concentration as a result.
• D) the price they are offered for their shares may be above book value or market value.

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Definitions:

Variable Expenses

Expenses that vary in relation to a company's operations.

Fixed Expenses

Expenses that remain constant regardless of production or sales volume, including items like lease payments, employee wages, and insurance costs.

Financial Advantage

The benefit gained from making economic decisions that result in increased wealth or financial health.

Average Cost

A method of cost valuation that calculates the cost of goods sold and inventory based on the average cost of all similar items in inventory.