If the Purchasing Firm's Price Earnings Ratio Is Greater Than

question 70

True/False

If the purchasing firm's price earnings ratio is greater than the acquired firm's price earnings, the surviving firm will automatically get an increase in earnings per share.

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Definitions:

Nominal Annual Rate

The interest rate stated on a loan or investment agreement, not adjusted for inflation or other factors that affect real value.

Compounded Monthly

The process of calculating interest on both the initial principal and the accumulated interest from previous periods, done monthly.

Invest

The act of allocating resources, usually money, with the expectation of generating an income or profit.

Nominal Annual Rate

The annual interest rate quoted by financial institutions, not adjusted for inflation or other factors that affect the real rate of return.