Which of the Following Statements Is False

question 5

Multiple Choice

Which of the following statements is false?

• A) In practice, most acquirers pay a substantial acquisition premium, which is the percentage difference between the acquisition price and the premerger price of the target firm.
• B) When a bid is announced, the target shareholders enjoy a gain of 16% on average in their stock price.
• C) In most U.S. states, the law requires that when existing shareholders of a target firm are forced to sell their shares, they receive the market price for their shares. In most cases, this concept is interpreted as the value inclusive of any value that arises because of the merger itself.
• D) A bidder is unlikely to acquire a target company for less than its current market value.

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Definitions:

Labor Market

The marketplace where the supply of workers is met by the demand for them by employers, determining employment levels and wages.

Median Earnings

The midpoint value of earnings in a specified group, where half earn more and half earn less.

Labor Market

A marketplace where employers find workers and workers find jobs.

Marginal Productivity Theory

An economic principle that asserts the payment factors of production, like labor and capital, is based on their marginal productivity in the production process.