Which of the Following Questions Is FALSE

question 15

Multiple Choice

Which of the following questions is FALSE?

• A) Once the acquirer has completed the valuation process, it is in the position to make a tender offer-that is, a public announcement of its intention to purchase a large block of shares for a specified price.
• B) If we view the pre-bid market capitalization as the stand-alone value of the target, then from the bidder's perspective, the takeover is a positive-NPV project only if the synergies created do not exceed the premium it pays.
• C) Purchasing a corporation usually constitutes a very large capital investment decision, so it requires a more accurate estimate of value that includes careful analysis of both operational aspects of the firm and the ultimate cash flows the deal will generate.
• D) A stock-swap merger is a positive-NPV investment for the acquiring shareholders if the share price of the merged firm (the acquirer's share price after the takeover) exceeds the premerger price of the acquiring firm.

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Definitions:

External Reporting

External reporting involves the preparation and presentation of financial statements and other reports by a company to provide financial and operational information to external stakeholders, such as investors, creditors, and regulatory agencies.

Absorption Costing

An accounting method that includes all manufacturing costs in the cost of a product.

Fixed Costs

Expenses that do not change with the volume of production or sales, such as rent, salaries, and insurance premiums.

Absorption Costing

A costing method that includes all manufacturing costs, both fixed and variable, in the cost of a product.