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Which One of the Following Statements Is Correct

Question 56

Multiple Choice
Which one of the following statements is correct?
A) An increase in the earnings per share as a result of an acquisition will increase the price per share of the acquiring firm.
B) The price-earnings ratio must remain constant as a result of an acquisition that fails to create value.
C) If firm A acquires firm B then the number of shares in AB will equal the number of shares of A plus the number of shares of B.
D) The price-earnings ratio can decrease even when the net present value of a merger is equal to zero.
E) Diversification is one of the greatest benefits derived from an acquisition.

Which one of the following statements is correct?


A) An increase in the earnings per share as a result of an acquisition will increase the price per share of the acquiring firm.
B) The price-earnings ratio must remain constant as a result of an acquisition that fails to create value.
C) If firm A acquires firm B then the number of shares in AB will equal the number of shares of A plus the number of shares of B.
D) The price-earnings ratio can decrease even when the net present value of a merger is equal to zero.
E) Diversification is one of the greatest benefits derived from an acquisition.

Correct Answer:

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