What Happens to the Outstanding Shares of the Target Firm

question 31

Multiple Choice

What happens to the outstanding shares of the target firm when the acquirer purchases 100% of the target's outstanding stock?

• A) They are added to the number of shares of Acquirer stock outstanding
• B) They are cancelled.
• C) They are converted into preferred stock.
• D) They are shown as treasury stock on the books of the combined companies.
• E) They are swapped for debt in the new company.

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Definitions:

Role Playing

A method or activity in which individuals assume roles and act them out in a scenario, often used for training, assessment, or therapeutic purposes.

Attitudes

A learned predisposition to respond in a consistently favorable or unfavorable manner with respect to a given object, person, or issue.

Respond

To react to something by taking a particular course of action.

Dissonance

The psychological discomfort felt when holding two or more conflicting cognitions (ideas, beliefs, values, or emotional reactions).