The stock price of a target may decrease if investors anticipate that the target will be acquired, since they are aware that stock prices of targets fall abruptly aFter a bid by the acquiring firm.

Question

Quizplus · Accepted Answer

Typically, the stock price of a target company increases upon the anticipation or announcement of an acquisition, as investors expect a premium over the current stock price to be offered by the acquiring firm.

The Stock Price of a Target May Decrease If Investors