CFA Practice Question

There are 86 practice questions for this study session.

CFA Practice Question

The less confident both the target and acquirer are that synergies will be realized, the more:

I. The acquirer will prefer to pay cash.
II. The acquirer will prefer to pay with stock.
III. The target will prefer to receive cash payment.
IV. The target will prefer to receive stock payment.
A. I and III
B. II and IV
C. II and III
Explanation: The acquirer may be willing to shift some of the risk (and potential reward) to the target by paying for the merger with stock, but the target may prefer the guaranteed gain that comes from a cash deal.

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