When Two Firms Merge,the Value of the Acquiring Firm Will

question 85

Multiple Choice

When two firms merge,the value of the acquiring firm will change by the:

• A) gain from the merger.
• B) NPV minus the cost of the merger.
• C) NPV of the merger.
• D) cost of the merger.

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Definitions:

NYSE

The New York Stock Exchange, one of the world's largest stock exchanges by market capitalization, located in New York City.

Stop-buy Order

A trading instruction used to purchase a security when it reaches a price above its current market price, typically to limit a loss on a short sale.

Short Sellers

Investors who borrow shares of a stock they expect to decrease in value, sell them, and then plan to buy them back at a lower price to return to the lender, profiting from the decline.

Limit Order

An order specifying a price at which an investor is willing to buy or sell a security.