Suppose that the market price of Company A is $50 per share and that of Company B is
$20) If A offers half a share of common stock for each share of B, the ratio of exchange of market prices would be:

Question

Quizplus · Accepted Answer

To find the ratio of exchange of market prices, we need to divide the market price of A by the market price of B, multiplied by the exchange ratio (which in this case is 0.5). So, (50/20) x 0.5 = 1.25. Therefore, the ratio of exchange of market prices would be 1.25.

Suppose That the Market Price of Company a Is $50