George's Equipment Is Planning on Merging with Nelson Machinery

question 57

Multiple Choice

George's Equipment is planning on merging with Nelson Machinery.George's will pay Nelson's shareholders the current value of their stock in shares of George's Equipment.George's currently has 4,600 shares of stock outstanding at a market price of $31 a share.Nelson's has 1,600 shares outstanding at a price of $38 a share.What is the value per share of the merged firm?

• A)$30.77
• B)$31.00
• C)$31.29
• D)$31.74
• E)$32.06

---

Definitions:

SEC

Stands for the Securities and Exchange Commission, a U.S. federal agency responsible for regulating the securities industry and protecting investors.

Blue-Sky Laws

are state regulations designed to protect investors against securities fraud by requiring the registration of securities offerings and disclosure.

Federal Securities Regulations

Laws and regulations established at the federal level aimed at protecting investors, maintaining fair and orderly functioning of securities markets, and facilitating capital formation.

Registration Statement

A set of documents, including a prospectus, required by regulatory authorities before a company can issue stock to the public.