Foundations of Financial Management Study Set 5
Quiz 20: External Growth Through Mergers
Which of the Following Is Not a Form of Compensation
Which of the following is not a form of compensation that selling shareholders could receive? A) Stock B) Cash C) Stock options D) Fixed income securities
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The impact on EPS is influenced by all but the: A) relative debt/equity ratios of the firms. B) exchange ratio. C) relative earnings growth rates of the firms. D) premium paid above market value for the acquired firm.
Dilution in earnings per share occurs when a company with: A) a high P/E ratio buys a company with a low P/E ratio. B) a low P/E ratio buys a company with a high P/E ratio. C) a high growth rate in earnings per share buys a company with a low growth rate in earnings per share. D) a low growth rate in earnings per share buys a company with a high growth rate in earnings per share.
Which of the following firms would be a takeover candidate? A) A firm with strong market position, high earnings and low current assets. B) A firm with strong market position, low earnings and low cash balances. C) A firm with strong market position, low earnings and high cash balances. D) A firm with high non-current assets, high earnings and low current assets.
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