Which One of the Following Statements Is Correct

question 32

Multiple Choice

Which one of the following statements is correct?

• A)The shareholders of an acquired firm are generally given a choice of accepting either cash or shares of stock when the acquisition is tax-free.
• B)To be a tax-free acquisition, the shareholders of an acquired firm must receive shares in the acquiring firm that are equal to 95 percent or less of the value of the shares held in the acquired firm.
• C)The assets of an acquired firm are recorded on the books of the acquiring firm at their current book value regardless of the tax status of the acquisition.
• D)Target firm shareholders demand a higher selling price when an acquisition is a non-taxable event.
• E)If the assets of a firm are written up as part of the acquisition process, the increase in value is considered to be a taxable gain.

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Definitions:

Poisson Approximation

A methodology in statistics used to approximate the probability of a given number of events happening in a fixed interval of time or space.

Probability

The measure of likelihood that an event will occur, expressed as a number between 0 and 1.

Random Variable

A variable whose values depend on outcomes of a random phenomenon. It can be discrete or continuous.

Standard Deviation

A metric that quantifies the spread or variation of a dataset in comparison to its average value.