Sue's Bakery Is Planning on Merging with Ted's Deli

question 65

Multiple Choice

Sue's Bakery is planning on merging with Ted's Deli. Sue's will pay Ted's shareholders the current value of their stock in shares of Sue's Bakery. Sue's currently has 4,500 shares of stock outstanding at a market price of $19 a share. Ted's has 2,100 shares outstanding at a price of $20 a share. What is the value of the merged firm?

• A)$106,500
• B)$107,800
• C)$125,400
• D)$127,500
• E)$131,600

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Definitions:

Gambler's Fallacy

The erroneous belief that if an event occurs more frequently than normal during a given period, it will happen less frequently in the future, or vice versa.

Midterms

Examinations given in the middle of an academic term to assess students' understanding of the course material up to that point.

Exceptionally Bright

Describing someone with superior intelligence, creativity, or ability, often significantly above the norm.

Conjunction Fallacy

A cognitive error where individuals assume that specific conditions are more probable than a single general one.