'It Is Unlikely That Undervaluation of Targets Is the Main

question 35

Multiple Choice

'It is unlikely that undervaluation of targets is the main reason for takeover activity.' This statement is:

• A)false,since markets have been proven to be inefficient.
• B)true,since management of the bidding company may have private information.
• C)false,since management of the bidding company may recognise the existence of alternative,better uses for assets of the target.
• D)true,since market efficiency implies that such opportunities are rarely found.

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Definitions:

Electric Power

The generation, transmission, and distribution of electricity for use in industrial, commercial, and residential settings.

Corporations

Legal entities that are separate and distinct from their owners, capable of owning property, suing and being sued.

Stockholders

Individuals or entities that own shares in a corporation, giving them partial ownership and potentially a claim on part of its profits.

Limited Partners

Investors in a partnership whose liability is limited to the amount of their investment, without direct management responsibilities.