Which of the following does NOT correctly complete this sentence: If cash is used to ﬁnance an acquisition, then _____________________.
A) the shareholders of the acquiring ﬁrm will be better off than if stock were used regardless of whether or not the acquisition is a success in terms of value
B) the cost of the acquisition will not depend on the acquisition gains
C) the selling ﬁrm's shareholders will not fully participate in the gains of the merger
D) the transaction is usually taxable
E) control of the acquiring ﬁrm will not be affected

Question

Quizplus · Accepted Answer

While using cash to finance an acquisition may have some benefits for the acquiring firm's shareholders, there is no guarantee that they will be better off than if stock were used, particularly if the acquisition does not generate expected value. Therefore, Choice A is not a correct completion of the sentence.

Which of the Following Does NOT Correctly Complete This Sentence