Assume the Shareholders of a Target Firm Benefit from Being

question 66

Multiple Choice

Assume the shareholders of a target firm benefit from being acquired in a stock transaction.Given this,these shareholders are most apt to realize the largest benefit if the:

• A)acquiring firm has the better management team and replaces the target firm's managers.
• B)management of the target firm is more efficient than the management of the acquiring firm which replaces them.
• C)management of both the acquiring firm and the target firm are as equivalent as possible.
• D)current management team of the target firm is kept in place even though the managers of the acquiring firm are more suited to manage the target firm's situation.
• E)current management team of the target firm is technologically knowledgeable but yet ineffective.

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Definitions:

APR

Annual Percentage Rate, a measure used to calculate the cost of borrowing, including interest and other fees, shown as a yearly rate.

EAR

Ear is the acronym for Effective Annual Rate, which measures the real return on an investment or the real interest rate on a loan, accounting for compounding over a specified period.

Monthly Stream

A monthly stream often refers to consistent or recurring flows of income, payments, or data that occur every month.

Discount Rate

An interest rate used to discount future cash flows to their present value, often central in determining the value of investments.