CFA Practice Question

There are 86 practice questions for this study session.

CFA Practice Question

The bootstrap effect occurs when

A. a low P/E company acquires a high P/E company.
B. a high P/E company acquires a low P/E company.
C. two companies with similar P/E ratios are combined.
Correct Answer: B

By purchasing the low P/E firm, the acquirer is essentially exchanging higher priced shares for lower priced shares.

User Contributed Comments 0

You need to log in first to add your comment.