The Formula to Compute the Value of the "Block Premium

question 74

Multiple Choice

The formula to compute the value of the "block premium" is

• A)
• \(\frac{Price per share paid for the control block - the exchange price after the control transaction }{ the exchange price after the announcement of the control transaction}\)
• B) \(\frac{Price per share paid for the control block - the exchange price after the control transaction }{ price per share paid for the control block}\)
• C)
• \(\frac{the exchange price after the control transaction - price per share paid for the control block}{ price per share paid for the control block}\)
• D)
• \(\frac{Price per share paid for the control block - the exchange price after the control transaction}{ the exchange price prior to the announcement of the control transaction}\)

---

Definitions:

Quick Ratio

A liquidity metric that evaluates a company's ability to pay its current liabilities without needing to sell inventory, calculated as (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities.

Current Liabilities

Obligations or debts that a company is expected to pay off within one year or within its normal operating cycle.

Quick Ratio

A measure of a company’s ability to meet its short-term obligations using its most liquid assets, excluding inventory.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the business’ normal operating cycle, whichever is longer.