Which of the Following Statements Is FALSE

question 42

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:

Grandfather

A term often used to describe clauses that exempt certain individuals or entities from new regulations based on previous conditions.

Bailment

The legal relationship created when personal property is transferred from one party to another under agreement that the property will be returned or otherwise disposed of according to the owner's directions.

Mutual Benefit

refers to a situation or action that provides advantages or positive outcomes to all parties involved.

Fundamental Duty

A basic or essential obligation that is imposed on an individual or entity by law, morality, or contract.