For the Bidder to Enjoy an Increase in EPS Following

question 10

Multiple Choice

For the bidder to enjoy an increase in EPS following a series of acquisitions, and in effect, play the P/E game, the following must be true:

• A) Post-deal P/E ratio must not decline
• B) Acquirer must pay continually lower premiums with each deal
• C) The bidder must make fewer deals over time
• D) None of the above

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Definitions:

July Futures Contract

A standard legal agreement to buy or sell a particular commodity or financial instrument at a predetermined price at a specified time in July.

Silver

A precious metal with the symbol Ag, used in jewelry, currency, and industrial applications for its conductivity and reflective properties.

Call Option

A financial contract that gives the buyer the right, but not the obligation, to buy an asset at a specified price within a certain period of time.

Put Option

A financial contract giving the holder the right to sell a specified amount of an underlying asset at a set price before a certain date.