The seller's insistence that the buyer agree to purchase its stock may encourage the buyer to
A) offer a lower purchase price because it is assuming all of the target firm's liabilities
B) offer a higher purchase price because it is assuming all of the target firm's liabilities
C) offer a lower purchase price because it is receiving all of the target's tax benefits
D) use its stock rather than cash to purchase the target firm
E) use cash rather than its stock to purchase the target firm

Question

Quizplus · Accepted Answer

When a buyer agrees to purchase a seller's stock, it means the buyer is assuming all of the target firm's liabilities. This increased risk can lead the buyer to offer a lower purchase price to compensate for the potential liabilities they are taking on.

The Seller's Insistence That the Buyer Agree to Purchase Its