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:

Committed Fixed Costs

Expenses that a company has committed to pay over a period, which do not vary with the level of production or sales.

Depreciation

An accounting method of allocating the cost of a tangible or physical asset over its useful life or life expectancy.

Variable Cost

Expenses that change in proportion to the amount of goods produced or the volume of sales.

Unit Basis

A method or metric used to measure, allocate, or assess something on a per-unit basis, often related to pricing or cost calculations.