Consider the following two statements: (i) The higher the price of the bidder's equity, the more likely it is that the bidder wants to pay with
Cash.
(ii) The acquirer's equity price generally falls upon the announcement of an equity-for-equity deal.
A)(i) is correct, (ii) is incorrect.
B)(ii) is correct, (i) is incorrect.
C)Both (i) and (ii) are correct.
D)Both (i) and (ii) are incorrect.
E)Acquirers do not hold equity.

Question

Quizplus · Accepted Answer

When a bidder's equity is highly valued, they are more likely to use it as currency for acquisitions, not cash. Acquirer's equity price often falls in equity-for-equity deals due to dilution concerns.

Consider the Following Two Statements: (I) the Higher the Price