In a Merger or Acquisition, a Firm Should Be Acquired

question 12

Multiple Choice

In a merger or acquisition, a firm should be acquired if it:

• A)generates a positive net present value to the shareholders of an acquiring firm.
• B)is a firm in the same line of business in which the acquirer has expertise.
• C)is a firm in a totally different line of business which will diversify the firm.
• D)pays a large dividend which will provide a cash pass through to the acquirer.
• E)None of the above.

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Definitions:

Inductive Reasoning

An analytical method where various propositions, assumed to be true or often validated as true, are amalgamated to reach a distinct conclusion.

Intuitive Thought

A cognitive process that creates immediate understanding or knowledge without evident rational thought and inference.

Concrete Reasoning

A form of thinking that is focused on the physical and the now, dealing primarily with observable or tangible facts rather than abstract concepts.

Analytic Thought

A cognitive process that involves breaking down complex information or concepts into smaller, more manageable parts for examination and evaluation.