Which of the Following Is the Most Appropriate Reason for an Acquiring

question 110

Multiple Choice

Which of the following is the most appropriate reason for an acquiring firm's shareholders to prefer using stock financing for acquisitions?

• A) There is no cash outflow.
• B) It mitigates the effects of overvaluation of the target firm.
• C) It mitigates the effects of undervaluation of the target firm.
• D) It avoids dilution of shares.

---

Definitions:

United States

A country located in North America, comprising 50 states, a federal district, five major self-governing territories, and various possessions.

Involuntarily Committed

This refers to a legal process through which individuals with severe mental health issues are hospitalized or treated without their consent due to potential harm to themselves or others.

Mental Hospital

A healthcare facility specializing in the treatment and care of patients with mental illnesses.

Psychoanalysis

A method of therapy and theory of personality developed by Sigmund Freud that emphasizes unconscious motives and conflicts.