In the Event That Active Corp

question 44

Multiple Choice

In the event that Active Corp., which has a low P/E ratio, acquires Basic Corp., which has a higher P/E ratio, we could be assured that one of the following would occur, with everything else being equal. Which one would occur?

• A) Active Corp. will have an immediate increase in EPS.
• B) Active Corp. will have an immediate decrease in EPS.
• C) Active Corp. will have an immediate increase in the growth rate of EPS.
• D) Active Corp. will have an immediate decrease in the P/E ratio.

---

Definitions:

Psychoanalytic Theory

A theory of personality development and therapeutic framework that emphasizes unconscious motives and conflicts, developed by Sigmund Freud.

Humanist Theory

A psychological perspective that emphasizes the study of the whole person and the uniqueness of each individual, often associated with concepts of free will and self-actualization.

Genetic Theory

A theory that explains traits, behaviors, and conditions primarily through the influence of genetic information and heredity.

Cognitive Theory

A psychological approach that emphasizes the role of mental processes in understanding behavior, emotions, and thought patterns.