When an Acquirer Accounts for a Business Combination They Have

question 1

Multiple Choice

When an acquirer accounts for a business combination they have to consider:
I - Recognition of the identifiable assets acquired.
II - Measurement of the identifiable assets acquired.
III - Recognition of the liabilities assumed.
IV - Measurement of the liabilities assumed.

• A) I and II only.
• B) I, II, III and IV.
• C) I and III only.
• D) II and IV only.

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Definitions:

Priced Factor

An element affecting the pricing of securities that is reflected in market prices due to its influence on asset returns.

Market Illiquidity

A situation in which an asset cannot be easily sold or exchanged for cash without a substantial loss in value.

Book-to-market Ratio

A valuation metric comparing the book value of a company to its market price.

Momentum

An investment strategy that involves buying securities that have had high returns over a certain period and selling those that have had poor returns, based on the belief that trends will continue.