Which of the following statements regarding merger deals is (are) correct?Choose all correct answer(s)On average, the price of the target increases substantially, while the price of the bidderdoes not increase by much.If the premium paid by the bidder exceeds the expected additional value to be createdthrough the merger, the bidder's share price is likely to drop on the announcement of thebid.A bidder can often acquire a public-listed company for less than its current market value.Synergies are by far the most common justification that bidders give for the premium theypay for a target.

Merger: A merger is an arrangement that combines the operations of two different firms into a single…

Answered: Which of the following statements…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The cost of a merger may outweigh the potential gain if the: present value of the acquired firm exceeds the price paid for it. acquired firm's shareholders receive more than the value of their firm. present value of the merged firms is greater than the sum of their individual values. merger allows cost savings to occur.
The directors of Company XYZ wishes to make a big investment into a new project which will be financed by means of a rights issue. The directors expect the share price will decrease to values even lower than the theoretical ex-rights price. Explain the factors that would influence the share price after the rights issue.
Because the cost of buying higher market share through acquisition may far exceed its revenue value, what factors should be considered by the company first.
In case of a firm facing an unfriendly merger, offer might arrange to be acquired by a different, friendly firm. A Moving to another question will save this response.
“Merger may be profitable but are they good for the economy?” Explain your answer towards this statement.
Suppose that the price of the target firm 43 is after the announcement. The acquirer's share price is 74 after the announcement, and it is 82 on the deal completion date. The acquirer offers to exchange 0.679 shares of the acquirer for each share of the target at the completion of the deal. Compute the return for a merger arbitrageur assuming that the deal is successful. The answer should be given in decimal form with three decimals. For example, write 0.105 instead of 10.5 or 10.5 % when the correct answer is 10.5 %.
What is the difference between par and book values of corporatestock? If an incorporated construction company winsa large cost plus fixed-fee contract, what impact might thishave on the market value of the company’s stock?
Hi. Need help with verifying if answers are correct please. Thank you!
Leveraged buying is : a. buying a company by using its borrowing potential b. launching a hostile takeover bidc. is a cross-shareholdingd. none of the above
General Meters is considering two mergers. The first is with Firm A in its own volatile industry, the auto speedometer industry, while the second is a merger with Firm B in an industry that moves in the opposite direction (and will tend to level out performance due to negative correlation). \table [[General Meters Merger with Firm A, General Meters Merger with Firm B,], [Possible Earnings ($ in, Possible Earnings ($ in,,,], [millions), Probability,0.20, $20, Probability], [$ 20, 0.40, 35, 0.15,], [35, 0.40, 50, 0.50,], [50,, 0.35,,]] a. Compute the mean, standard deviation, and coefficient of variation for both investments Note: Do not round intermediate calculations. Enter your answers in millions. Round "Coefficient of variation" to 3 decimal places and "Standard deviation" to 2 decimal places. \table[[, Merger A, Merger B], [Mean,,], [Standard deviation,,], [Coefficient of variation,,]] b. Assuming investors are risk-averse, which alternative can be expected to bring the higher…
A finding that would provide evidence AGAINST the semi-strong form of the EMT. O Expansion disclosure reactions take considerable time. Technical analysis is worthless in determining stock prices. O Money managers do not outperform the market as à whole. O Investors do not earn abnormal profits after merger announcement. O The price decline of large secondary offerings is permanent when outsiders are selling.
Vijay

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