A Software Company Acquires a Smaller Company in Order to Acquire

question 45

True/False

A software company acquires a smaller company in order to acquire the patents that it holds. The cost of this acquisition will be recorded on the statement of cash flows as an outflow under Investment Activities.

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Definitions:

Time To Expiration

The duration until the expiry date of a financial instrument, such as an option or futures contract.

Real Goods

Physical, tangible products and commodities that can be used, consumed, or sold.

Call Options

Financial derivatives that give the purchaser the right, but not the obligation, to buy a stock or other asset at a specified price within a certain time frame.