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Consider two firms,Bob Company and Cat Enterprises,both with earnings of $10 per share and 5 million shares outstanding.Cat is a mature company with few growth opportunities and a stock price of $25 per share.Bob is a new firm with much higher growth opportunities and a stock price of $40 per share.Assume Bob acquires Cat using its own stock and the takeover adds no value.In a perfect capital market,how many shares must Bob offer Cat's shareholders in exchange for their shares?
Molecules
The smallest units of a chemical substance that retain their unique chemical identity.
Higher Boiling
Referring to a substance with a higher boiling point compared to another substance, often used to differentiate between similar compounds in purification processes.
Ketone
An organic compound characterized by a carbonyl group (C=O) bonded to two carbon atoms.
Acetone
A colorless, volatile, and flammable liquid used as a solvent, known chemically as propan-2-one or dimethyl ketone.
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