If the P/E paid is greater than the P/E of the acquiring company, the effect on the earnings per share of the acquired company will be
A) positive.
B) uncorrelated.
C) negative.
D) neutral.

Question

Quizplus · Accepted Answer

The higher P/E paid by the acquiring company indicates that the market values the acquired company's earnings more highly, leading to a positive effect on the acquired company's earnings per share.

If the P/E Paid Is Greater Than the P/E of the Acquiring