Which of the Following Questions Is FALSE

question 15

Multiple Choice

Which of the following questions is FALSE?

• A) Once the acquirer has completed the valuation process, it is in the position to make a tender offer-that is, a public announcement of its intention to purchase a large block of shares for a specified price.
• B) If we view the pre-bid market capitalization as the stand-alone value of the target, then from the bidder's perspective, the takeover is a positive-NPV project only if the synergies created do not exceed the premium it pays.
• C) Purchasing a corporation usually constitutes a very large capital investment decision, so it requires a more accurate estimate of value that includes careful analysis of both operational aspects of the firm and the ultimate cash flows the deal will generate.
• D) A stock-swap merger is a positive-NPV investment for the acquiring shareholders if the share price of the merged firm (the acquirer's share price after the takeover) exceeds the premerger price of the acquiring firm.

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Definitions:

Bank Account

A financial account maintained by a banking institution in which the account holder can deposit or withdraw money.

Cash

Money in the form of bills or coins; physical currency.

Check Outstanding

A written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer, which has been issued but not yet cashed or cleared.

Bank Reconciliation

The analysis that details the items responsible for the difference between the cash balance reported in the bank statement and the balance of the cash account in the ledger.