Which of the Following Is True of the Share Price

question 11

Multiple Choice

Which of the following is true of the share price reactions to takeover bids?

• A)The combined market values of the shares of the target and bidder go up around the time of the announced bids.
• B)The share prices of target firms almost always react unfavourably to merger and tender offer bids.
• C)The bidder's share price reacts more unfavourably,on average,when the bidder makes a cash offer rather than an offer to exchange equity.
• D)Since there is a net gain to bondholders around the time of the merger announcement the share prices will go down.

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