When the ratio of exchange in a merger is equal to one and both the acquiring and the target companies have the same premerger earnings per share, both the acquiring and the target companies have the same
A) P/E ratio.
B) debt ratio.
C) return on equity.
D) book value per share.

Question

Quizplus · Accepted Answer

When the ratio of exchange is equal to one and the premerger earnings per share are the same for the acquiring and target companies, the post-merger earnings per share will also be the same. Therefore, both companies will have the same P/E ratio.

When the Ratio of Exchange in a Merger Is Equal