Firm X Is Planning on Merging with Firm Y

question 9

Multiple Choice

Firm X is planning on merging with Firm Y.Firm X currently has 3,500 shares of stock outstanding at a market price of $25 a share.Firm Y has 400 shares outstanding at a price of $22 a share.The merger will create $500 of synergy.How many of its shares should Firm X offer in exchange for all Firm Y's shares if it wants its acquisition cost to be $9,000?

• A)408
• B)359
• C)409
• D)360
• E)375

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Definitions:

Physical Nature

Pertains to the material aspects or characteristics of something, focusing on its tangible properties.

Magnuson-Moss Act

A federal law enacted in 1975 to protect consumers from deceptive warranty practices, applying to warranties on consumer products.

Limited Warranty

A warranty that provides coverage with certain conditions and limitations on the duration and scope.

Express Warranties

Explicit promises made by a seller regarding the quality or functionality of the goods being sold.