Empirical Evidence Indicates That the Returns to Shareholders of the Target

question 13

Essay

Empirical evidence indicates that the returns to shareholders of the target firm vary significantly from the returns to the shareholders of the acquiring firm.Identify the shareholders that tend to realize the smaller return.Does your answer depend on the way the acquisition is financed?

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Definitions:

International Monetary Reserves

Assets that central banks and monetary authorities hold in foreign currencies, including foreign banknotes, bank deposits, bonds, treasury bills, and other government securities, to back its liabilities.

Demand for Pounds

Refers to the desire or requirement for British pounds in the foreign exchange market, usually driven by trade, investment, or speculation needs.

Fixed Exchange Rates

A currency system where the value of a currency is pegged to another currency, a basket of currencies, or a valuable commodity like gold.

World Liquidity

The availability of global financial assets that can be easily exchanged or used for transactions.