The Prada Corporation Is Considering a Merger with the Stone

question 35

Multiple Choice

The Prada Corporation is considering a merger with the Stone Company, which has 500,000 outstanding shares selling for $30. An investment banker has advised that to succeed in its merger, Prada Corp. would have to offer $45 per share for Stone's stock. Currently, Prada Corp. stock is selling for $25. How many shares of Prada Corp. stock would have to be exchanged to acquire all of Stone Company's stock?

• A) 266,667
• B) 600,000
• C) 900,000
• D) 20,000

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Definitions:

Market Price

The present cost at which a service or asset is available for purchase or sale.

Government Allow

Governmental permissions or grants that enable individuals or entities to legally perform activities or exploit resources.

Shortage Of Coffee

A situation where the demand for coffee exceeds its supply, leading to a decrease in available coffee stocks.

Effective Price Ceiling

A government-imposed limit on the price charged for a product, intended to keep prices below what they would be in a free market, and effectively enforced to achieve its goal.