In a Merger or Acquisition,a Firm Should Be Acquired If

question 29

Multiple Choice

In a merger or acquisition,a firm should be acquired if it:

• A)generates a positive net present value to the shareholders of the acquiring firm.
• B)is a firm in the same line of business in which the acquirer has expertise.
• C)is a firm in a totally different line of business which will diversify the firm.
• D)pays a large dividend which will provide a cash pass through to the acquirer.
• E)increases the firm's market share.

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Definitions:

Loan Balance

The amount of money that remains to be paid back on a loan at any given time, excluding future interest.

Compounded Semi-Annually

The process where interest is calculated and added to the principal sum of an investment or loan twice a year.

Loan Payment

The amount paid periodically to the lender of a loan, which includes both principal and interest.

Interest

The charge for borrowing money or the payment received for depositing money, typically expressed as an annual percentage rate.