If the P/E Paid for a Target Company Is Equal

question 105

Multiple Choice

If the P/E paid for a target company is equal to the P/E of the acquiring company, the effect on the earnings per share of the acquiring company will be

• A) positive.
• B) neutral.
• C) negative.
• D) uncorrelated.

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Definitions:

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The 37th President of the United States (1969–1974), known for his foreign policy achievements and the Watergate scandal that led to his resignation.

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The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.