The Free-Cash-Flow Theory of Takeovers Predicts That Firms

question 86

Multiple Choice

The free-cash-flow theory of takeovers predicts that firms:

• A) without free cash flow will become the most common LBOs.
• B) with free cash flow will continue to be the acquirers.
• C) with excess cash do not have a tendency to use it wisely.
• D) with excess cash tend to have the most carve-outs.

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Definitions:

Biochemist

A scientist specializing in the chemical processes and substances that occur within living organisms.

Attitude Change

Any significant modification of an individual’s attitude. In the persuasion process, this involves the communicator, the communication, the medium used, and the characteristics of the audience. Attitude change can also occur by inducing someone to perform an act that runs counter to an existing attitude.

Persuasion

The process of influencing someone's beliefs, attitudes, intentions, motivations, or behaviors through communication.

Yale

An American private Ivy League research university located in New Haven, Connecticut, known for its excellent educational programs.